<PAGE>
RULE NO. 424(b)(5)
REGISTRATION NO. 33-66116
PROSPECTUS SUPPLEMENT
(To Prospectus dated December 10, 1996)
$65,500,000
UNION ELECTRIC COMPANY
SERIES A SKIS/SM/
7.69% SUBORDINATED CAPITAL INCOME SECURITIES
(SERIES A SUBORDINATED DEFERRABLE INTEREST DEBENTURES)
------------------
The 7.69% Subordinated Capital Income Securities (Series A Subordinated
Deferrable Interest Debentures) (the "Debentures") are unsecured debt
securities of Union Electric Company (the "Company") which will mature on
December 15, 2036. Interest on the Debentures is payable semi-annually on June
15 and December 15 in each year, commencing June 15, 1997, except under
circumstances described herein during and under which payment of interest on
the Debentures may be deferred. The Debentures will not be redeemable prior to
December 15, 2006; thereafter, the Debentures will be redeemable at the option
of the Company, in whole or in part, on or after December 15, 2006 at the
redemption prices set forth herein together with accrued interest to the
redemption date. The Debentures will be represented by a Global Security that
will be deposited with, or on behalf of, The Depository Trust Company ("DTC")
and will be available for purchase in denominations of $1,000 and any integral
multiple thereof. Each $1,000 principal amount of Debentures is referred to
herein as a "Debenture." See "Certain Terms of the Debentures."
The obligations of the Company under the Debentures are subordinate and
junior in right of payment to Senior Indebtedness (as defined in the
accompanying Prospectus) of the Company. As of September 30, 1996, outstanding
Senior Indebtedness of the Company aggregated approximately $1.8 billion.
------------------
SEE "RISK FACTORS" ON PAGE S-4 FOR CERTAIN INFORMATION RELEVANT TO AN
INVESTMENT IN THE DEBENTURES, INCLUDING THE PERIOD AND CIRCUMSTANCES DURING
AND UNDER WHICH PAYMENT OF INTEREST ON THE DEBENTURES MAY BE DEFERRED AND THE
RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public(1) Discount(2) Company(3)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Debenture.............................. 100.0% 1.0% 99.0%
- --------------------------------------------------------------------------------
Total...................................... $65,500,000 $655,000 $64,845,000
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from the date of original issuance.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting estimated expenses of $60,000 payable by the Company.
------------------
The Debentures are offered by the Underwriter, as specified herein, subject
to receipt and acceptance by it and subject to its right to reject any order
in whole or in part. It is expected that the Debentures will be ready for
delivery in book-entry only form through the facilities of DTC in New York,
New York, on or about December 16, 1996, against payment therefor in
immediately available funds.
------------------
LEHMAN BROTHERS
December 10, 1996
- --------
/(SM)/Lehman Brothers Inc. has applied to register SKIS as a service mark.
<PAGE>
SELECTED INFORMATION
The following material, which is presented herein solely to furnish limited
introductory information regarding the Company and the offering, has been
selected from or is based upon, is qualified in its entirety by, and should be
read together with, the detailed information and financial statements included
and incorporated by reference into this Prospectus Supplement and in the
accompanying Prospectus.
THE OFFERING
Securities Offered.................. $65,500,000 aggregate principal
amount of Debentures due December
15, 2036.
Interest Payment Dates.............. June 15 and December 15 in each year,
commencing June 15, 1997, except
under circumstances described herein
during and under which payment of
interest on the Debentures may be
deferred.
Redemption.......................... The Debentures will not be redeemable
prior to December 15, 2006;
thereafter, the Debentures are
redeemable at the option of the
Company, in whole or in part, at any
time on or after December 15, 2006
and prior to maturity upon not less
than 30 nor more than 60 days'
notice at the redemption prices set
forth herein together with accrued
interest to the redemption date.
Subordination....................... The obligations of the Company under
the Debentures are subordinate and
junior in right of payment to Senior
Indebtedness (as defined in the
accompanying Prospectus) of the
Company. As of September 30, 1996,
outstanding Senior Indebtedness of
the Company aggregated approximately
$1.8 billion.
UNION ELECTRIC COMPANY
Business............................ Principally, the generation,
transmission, distribution and sale
of electricity.
Service Area........................ Electric service to an approximately
24,500 square mile area primarily
covering the eastern and central
portions of Missouri, and portions
of Illinois adjacent to St. Louis,
Missouri; and gas service to 90
Missouri communities and Alton,
Illinois, and vicinity.
Service Area Population
(estimated)......................... Electric--2,600,000; Gas--360,000
Customers........................... Electric--1,133,000; Gas--120,000
Revenue Distribution (12 months
ended September 30, 1996).......... Electric--95.7%; Gas--4.3%
Sources of Kwh Generation (12
months ended September 30, 1996)... Coal--68.1%; Nuclear--28.5%; Hydro--
3.4%
S-2
<PAGE>
Property and Plant, net (as of
September 30, 1996)................. $5.3 billion
Pending Merger...................... As described in the accompanying
Prospectus, the Company has entered
into an Agreement and Plan of Merger
pursuant to which the Company and
CIPSCO Incorporated ("CIPSCO") will
combine to form a new registered
public utility holding company
subject to satisfaction of certain
conditions. Consummation of the
merger will not affect the Company's
obligations with respect to the
Debentures or its other
indebtedness. See "Recent Merger
Developments."
SELECTED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
12 MONTHS ENDED
------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 1993 1992 1991
------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating Revenues...... $2,247,625 $2,102,707 $2,056,116 $2,066,004 $2,015,121 $2,096,940
Operating Income........ $ 433,281 $ 441,896 $ 450,186 $ 411,297 $ 412,017 $ 482,813
Net Income.............. $ 316,294 $ 314,107 $ 320,757 $ 297,160 $ 302,748 $ 321,512
Ratios of Earnings to
Fixed Charges.......... 4.85 4.78 4.68 4.66 4.66 4.21
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996
--------------------------------------
ACTUAL RATIO AS ADJUSTED(1) RATIO
---------- ----- -------------- -----
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Long-Term Senior Debt (excluding cur-
rent maturities)...................... $1,727,945 39.7% $1,727,945 39.7%
Long-Term Subordinated Debt............ -- -- 65,500 1.5
Preferred Stock Subject to Mandatory
Redemption............................ 624 0.0 -- --
Preferred Stock Not Subject to Manda-
tory Redemption....................... 218,497 5.0 154,406 3.5
Common Stock Equity.................... 2,406,831 55.3 2,406,831 55.3
---------- ----- ---------- -----
Total Capitalization.................. $4,353,897 100.0% $4,354,682 100.0%
========== ===== ========== =====
Short-Term Debt and Current Maturities
of
Long-Term Debt........................ $ 76,490 $ 76,490
========== ==========
</TABLE>
- --------
(1) Adjusted to reflect the issuance and sale of the Debentures and the
redemption of certain shares of the Company's Preferred Stock with the
proceeds thereof. See "Use of Proceeds."
S-3
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------------
RISK FACTORS
Prospective purchasers of Debentures should carefully review the information
contained elsewhere in this Prospectus Supplement and in the accompanying
Prospectus and should particularly consider the following matters:
SUBORDINATION OF DEBENTURES. The Debentures are unsecured obligations of the
Company and are subordinate and junior in right of payment to Senior
Indebtedness of the Company. As of September 30, 1996, outstanding Senior
Indebtedness of the Company aggregated approximately $1.8 billion. There are
no terms in the Debentures that limit the Company's ability to incur
additional indebtedness, including indebtedness that ranks senior to the
Debentures. A default with respect to, or the acceleration of, any other
indebtedness of the Company will not constitute an Event of Default with
respect to the Debentures. See "Description of New Debt Securities--
Subordination" in the accompanying Prospectus.
OPTION TO EXTEND INTEREST PAYMENT PERIOD. The Company has the right under
the Indenture (as defined herein) at any time and from time to time during the
term of the Debentures, so long as an Event of Default has not occurred and is
not continuing, to extend the interest payment period to a period not
exceeding 10 consecutive semi-annual periods (an "Extension Period"). Semi-
annual interest payments on the Debentures would be deferred (but would
continue to accrue with interest thereon at the same rate as specified for the
Debentures to the extent permitted by applicable law) during any such
Extension Period. Prior to the termination of any such Extension Period, the
Company may further extend the interest payment period, provided that such
Extension Period, together with all such previous and further extensions
thereof, may not exceed 10 consecutive semi-annual periods or extend beyond
the maturity of the Debentures. Upon the termination of any Extension Period
and the payment of all amounts then due, the Company may select a new
Extension Period, subject to the above requirements. See "Certain Terms of the
Debentures--Option to Extend Interest Payment Period."
If the Company exercises its right to extend the interest payment period,
the Company may not, during any such Extension Period, declare or pay any
dividend on, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payments with
respect to the foregoing. Therefore, the Company believes that the likelihood
of extension of an interest payment period on the Debentures is remote.
ACCRUALS OF INTEREST FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. Should
the Company so defer payment of interest, holders of the Debentures (even if
they used the cash method of accounting for United States federal income tax
purposes) would be required to accrue income (in the form of original issue
discount) for United States federal income tax purposes even though interest
was not being paid on a current basis. As a result, such holders would be
required to include such interest in gross income for United States federal
income tax purposes in advance of the receipt of cash, and would not receive
the cash from the Company related to such income if such holders disposed of
their Debentures prior to the record date for payment of interest. See "United
States Taxation--Stated Interest and Original Issue Discount."
USE OF PROCEEDS
The net proceeds from the sale of the Debentures will be used to redeem the
outstanding 330,001 shares of the Company's Preferred Stock, $7.44 Series of
1972, stated value $100 per share, which are redeemable at a redemption price
of $101 per share, the outstanding 300,000 shares of the Company's Preferred
Stock, $6.40 Series of 1967, stated value $100 per share, which are redeemable
at a redemption price of $101.50 per share, the outstanding 6,240 shares of
the Company's Preferred Stock, $6.30 Series of 1983, stated value $100 per
share, which are redeemable at a redemption price of $100 per share, and the
outstanding 3,000 shares of the Company's Preferred Stock, $5.50 Series B of
1983, stated value $100 per share, which are redeemable at a redemption price
of $103.50 per share. Such redemptions are subject to the Company's closing
the sale of the Debentures. Pending application to such redemptions, the net
proceeds will be utilized temporarily to reduce short-term bank debt and to
repay outstanding commercial paper or for other general corporate purposes.
S-4
<PAGE>
RECENT MERGER DEVELOPMENTS
On August 11, 1995, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with CIPSCO and Ameren Corporation ("Ameren"), a
newly formed entity, 50% owned by the Company and 50% owned by CIPSCO,
pursuant to which, among other things, the Company and CIPSCO will be merged
with Ameren (the "Merger").
On July 12, 1996, a joint agreement was filed with the Missouri Public
Service Commission (the "MPSC") that recommends approval of the Merger. The
Company, the MPSC staff, the Office of the Public Counsel, several customer
groups and others signed the agreement. Agreement provisions include a new
three-year alternative regulation plan that would run from July 1, 1998 to
June 30, 2001. Like the current alternative regulation plan with the MPSC, the
new plan provides that earnings over a 12.61 percent regulatory return on
equity ("ROE") up to a 14 percent ROE would be shared equally between
customers and shareholders. The new three-year plan would also return to
customers 90 percent of all earnings above a ROE of 14 percent up to
16 percent. Earnings above a 16 percent ROE would be credited entirely to
customers. Other agreement provisions include: recovery over a 10-year period
of the Missouri portion of an estimated $71.5 million of Merger-related
transaction and transition costs; a Missouri electric rate decrease, effective
September 1, 1998, based on the weather-adjusted average annual credits to
customers under the current alternative regulation plan with the MPSC; and an
experimental retail wheeling pilot program for 100 megawatts of electric power
to be filed by the Company no later than March 1, 1997. Also, as part of the
agreement, the Company will not seek to recover in Missouri the merger
premium. The exclusion of the merger premium from rates would not result in a
charge to earnings. On September 25, 1996, the MPSC ordered that additional
information be filed in November 1996 in connection with the Merger
proceedings. The MPSC is expected to issue a decision on the Merger in early
1997.
On October 16, 1996, the Federal Energy Regulatory Commission (the "FERC")
set the proposed Merger for hearing. The FERC directed the presiding
administrative law judge in the case to issue an initial decision no later
than April 30, 1997. The FERC is expected to issue a final decision on the
Merger by the end of 1997.
On November 7, 1996, the Hearing Examiner for the Illinois Commerce
Commission (the "ICC") issued a proposed order in connection with the
Company's and CIPSCO's Merger proceedings. In the proposed order, the Hearing
Examiner recommended that the Merger be approved. In addition, the Hearing
Examiner recommended that a decision on the Company's and CIPSCO's proposals
for sharing Merger savings be made after the Merger. The Company and CIPSCO
will be required to file a rate case or alternative regulation plan within one
year after closing of the Merger whereby an appropriate sharing of net Merger
savings between stockholders and customers will be determined at that time.
The Hearing Examiner also recommended that the Company's proposed transfer of
its existing Illinois electric and gas facilities to CIPSCO be denied, but
recommended that the joint dispatch agreement be approved. A final order from
the ICC is expected by the end of 1996.
The following selected unaudited pro forma financial information reflects
the effects of combining the Company and CIPSCO into Ameren under the pooling
of interests method of accounting.
<TABLE>
<CAPTION>
12 MONTHS ENDED
SEPTEMBER 30,
1996 1995 1994 1993
--------------- ---------- ---------- ----------
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Total revenues................. $3,291,799 $3,127,316 $3,146,101 $3,138,944
Net income..................... $ 376,393 $ 372,872 $ 391,459 $ 368,571
Earnings per share............. $ 2.74 $ 2.72 $ 2.85 $ 2.69
</TABLE>
The pro forma financial information consolidates the financial results of
Electric Energy Inc. ("EEI"), which effectively will be 60% owned by Ameren
subsequent to the Merger as a result of the current ownership interests in EEI
by the Company and CIPSCO. Additional pro forma information is included in the
documents incorporated by reference herein. See "Incorporation of Certain
Documents by Reference" in the accompanying Prospectus.
S-5
<PAGE>
CERTAIN TERMS OF THE DEBENTURES
The following description of specific terms of the Debentures should be read
in conjunction with the description of the general terms and provisions of the
New Debt Securities set forth in the accompanying Prospectus under the caption
"Description of New Debt Securities." The following summary does not purport
to be complete and is subject in all respects to the provisions of, and is
qualified in its entirety by reference to, the description in the accompanying
Prospectus and the Indenture, dated as of December 1, 1996, from the Company
to Boatmen's Trust Company, as Trustee (the "Trustee"), as supplemented by
resolutions of the Board of Directors of the Company and resolutions of the
Executive Committee thereof. The Indenture, as so supplemented, is hereinafter
referred to in this Prospectus Supplement as the "Indenture."
PRINCIPAL AMOUNT, INTEREST AND MATURITY
The Debentures will be issued as a series of debt securities under the
Indenture. The Debentures will be limited in aggregate principal amount to
$65.5 million.
The Debentures are to mature on December 15, 2036 and will bear interest at
the rate per annum shown in the title thereof payable semi-annually in arrears
on June 15 and December 15 in each year, commencing June 15, 1997 to the
persons in whose names the Debentures are registered at the close of business
on the relevant record dates, which will be the Business Day (as hereinafter
defined) immediately preceding the relevant payment dates. For so long as the
Debentures are registered in the name of DTC or its nominee, the principal and
interest due on the Debentures will be payable by the Company or its agent to
DTC for payment to its Participants (as defined herein) for subsequent
disbursement to Beneficial Owners (as defined herein). The amount of interest
payable for any period will be computed on the basis of a 360-day year of
twelve 30-day months. Interest will accrue from the date of original issuance
or from the most recent interest payment date through which interest has been
paid, as the case may be. In the event that any date on which interest is
payable on the Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay) with the same force and effect as if made on such date. A "Business
Day" shall mean any day other than a day on which banking institutions in New
York City are authorized or obligated by law to close.
GLOBAL SECURITIES
This discussion of DTC and its book-entry system supplements the discussion
of depositary arrangements in "Global Securities" in the accompanying
Prospectus.
DTC will act as securities depositary for the Debentures. The Debentures
will be issued in fully-registered form in the name of Cede & Co. (DTC's
partnership nominee). One or more fully-registered Debenture certificates will
be issued as Global Securities for the Debentures, in the aggregate principal
amount of the Debentures, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds 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
S-6
<PAGE>
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc.
Access to the DTC system is also available to 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" and together with Direct Participants,
"Participants"). The Rules applicable to DTC and its Participants are on file
with the Securities and Exchange Commission.
Purchases of Debentures under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Debentures on DTC's
records. The ownership interest of each actual purchaser of Debentures
("Beneficial Owner") is in turn to be recorded on the 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 Participant through which the Beneficial Owner entered into
the transaction. Transfers of ownership interests in the Debentures 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 Debentures, except in the event that
use of the book-entry system for the Debentures is discontinued.
To facilitate subsequent transfers, all Debentures deposited by Direct
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Debentures with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual Beneficial Owners of the Debentures; DTC's records
reflect only the identity of the Direct Participants to whose accounts such
Debentures are credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
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.
Neither DTC nor Cede & Co. will consent or vote with respect to Debentures.
Under its usual procedures, DTC would mail an Omnibus Proxy to the Company 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
Debentures are credited on the record date (identified in a listing attached
to the Omnibus Proxy).
Principal and interest payments on the Debentures will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on the payable date in
accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on the payable date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as is the case with securities held for
the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC or the Company,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal and interest to DTC is the responsibility
of the Company, disbursement of such payments to Direct Participants shall be
the responsibility of DTC, and disbursements of such payments to the
Beneficial Owners shall be the responsibility of Participants.
DTC may discontinue providing its services as securities depositary with
respect to the Debentures at any time by giving reasonable notice to the
Company. Under such circumstances, in the event that a successor securities
depositary is not obtained, Debenture certificates are required to be printed
and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that event,
Debenture certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
is based upon information obtained from DTC, and neither the Company, the
Underwriter nor the Trustee takes any responsibility for the accuracy thereof.
S-7
<PAGE>
Neither the Company, the Trustee nor the Underwriter will have any
responsibility or obligation to Participants, or the persons for whom they act
as nominees, with respect to the accuracy of the records of DTC, its nominee
or any Participant with respect to any ownership interest in the Debentures,
or payments to, or the providing of notice for, Participants or Beneficial
Owners.
REDEMPTION
The Debentures will not be redeemable prior to December 15, 2006.
Thereafter, the Debentures will be redeemable at the option of the Company, in
whole or in part, at any time on or after December 15, 2006 at the following
redemption prices (in each case expressed in percentages of principal amount):
<TABLE>
<CAPTION>
IF REDEEMED DURING 12 MONTH REDEMPTION
PERIOD BEGINNING DECEMBER 15, PRICE
----------------------------- ----------
<S> <C>
2006.......................................................... 103.845%
2007.......................................................... 103.461
2008.......................................................... 103.076
2009.......................................................... 102.692
2010.......................................................... 102.307
2011.......................................................... 101.923
2012.......................................................... 101.538
2013.......................................................... 101.154
2014.......................................................... 100.769
2015.......................................................... 100.385
2016 and thereafter........................................... 100.000%
</TABLE>
in each case, upon not less than 30 nor more than 60 days' notice and together
with accrued interest to the redemption date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time and from time to time during
the term of the Debentures to extend the interest payment period to a period
not exceeding 10 consecutive semi-annual periods, and at the end of such
Extension Period, the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the same rate as specified for the
Debentures to the extent permitted by applicable law); provided, however, that
during any such Extension Period the Company shall not declare or pay any
dividend on, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock or make any guarantee payments with
respect to the foregoing. Prior to the termination of any such Extension
Period, the Company may further extend the interest payment period, provided
that such Extension Period, together with all such previous and further
extensions thereof, may not exceed 10 consecutive semi-annual periods or
extend beyond the maturity of the Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may
select a new Extension Period, subject to the above requirements. No interest
during an Extension Period, except at the end thereof, shall be due and
payable. The Company shall give the holders of the Debentures and the Trustee
written notice of its selection of such Extension Period ten Business Days
prior to the earlier of (i) the succeeding next interest payment date and (ii)
the date the Company is required to give notice to holders of the Debentures
(or, if applicable, to the New York Stock Exchange or other applicable self-
regulatory organization) of the record or payment date of such interest
payment, but in any event not less than two Business Days prior to such record
date.
SUBORDINATION
The obligations of the Company under the Debentures are subordinate and
junior in right of payment to Senior Indebtedness of the Company in accordance
with the provisions described in the accompanying
S-8
<PAGE>
Prospectus under the caption "Description of New Debt Securities--
Subordination." As of September 30, 1996, outstanding Senior Indebtedness of
the Company aggregated approximately $1.8 billion.
PAYING AGENT AND REGISTRAR
Initially, the Company will act as Paying Agent and Registrar for the
Debentures.
UNITED STATES TAXATION
The following summary describes the principal United States federal income
tax consequences of the purchase, ownership and disposition of Debentures.
This summary only addresses Debentures held as capital assets by United States
Holders (as defined below) that acquire Debentures on their original issue at
their original offering price, and does not deal with special situations, such
as those of dealers in securities or currencies, financial institutions,
insurance companies, tax-exempt organizations, persons holding Debentures as
part of a hedging or conversion transaction or a straddle or United States
Holders whose "functional currency" is not the U.S. dollar. As used herein, a
"United States Holder" means a beneficial owner of Debentures that is a
citizen or resident of the United States, a corporation or partnership
organized in or under the laws of the United States, any state thereof or the
District of Columbia, or an estate or trust the income of which is subject to
United States federal income taxation regardless of its source.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Winthrop, Stimson, Putnam & Roberts, special tax
counsel to the Company. This summary is based upon the Internal Revenue Code
of 1986, as amended (the "Code"), and regulations, rulings, pronouncements and
judicial decisions thereunder as of the date hereof, all of which are subject
to change. Any such change, which may be retroactive, may cause the United
States federal income tax consequences to vary substantially from the
consequences described below. An opinion of counsel is not binding on the
Internal Revenue Service ("IRS") or the courts, and the authorities on which
this summary is based are subject to various interpretations. It is,
therefore, possible that the United States federal income tax treatment of the
purchase, ownership and disposition of Debentures may differ from the
treatment described below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE UNITED STATES FEDERAL
TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF DEBENTURES, AS
WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
STATED INTEREST AND ORIGINAL ISSUE DISCOUNT
Under new Treasury Regulations applicable to debt instruments issued on or
after August 13, 1996, generally, stated interest on a debt instrument will
give rise to original issue discount ("OID") unless the likelihood of late
payment or nonpayment is a "remote contingency." Under the Indenture, the
Company has the right to defer the payment of interest on the Debentures at
any time or from time to time for a period not exceeding 10 consecutive semi-
annual periods with respect to each Extension Period, provided that no
Extension Period may extend beyond the maturity of the Debentures. The Company
believes that the likelihood of it exercising its option to defer payments of
interest is remote because exercising the option would, among other things,
prevent the Company from declaring dividends on its capital stock.
Accordingly, the Company believes that the Debentures should be considered as
issued without OID and, therefore, except as set forth below, stated interest
on Debentures will generally be taxable to a United States Holder as ordinary
income at the time it is paid or accrued in accordance with the United States
Holder's method of accounting for United States federal income tax purposes.
Notwithstanding the foregoing, should the Company exercise its right to
defer payments of interest, the Debentures would at that time be treated as
having been reissued with OID. Consequently, United States Holders
S-9
<PAGE>
(even if they used the cash method of accounting for United States federal
income tax purposes) would be required to include OID in income on an economic
accrual basis for as long as the Debentures remained outstanding, including
any Extension Periods. The amount of OID that would accrue in any semi-annual
period would approximately equal the amount of interest that accrues in that
semi-annual period at the stated interest rate. A United States Holder that
disposed of Debentures before the record date for the payment of interest
following an Extension Period would include interest in gross income as it
accrued on the Debentures but would not receive any interest payments related
thereto from the Company.
SALE OR REDEMPTION OF DEBENTURES
Gain or loss will be recognized by a United States Holder on a sale of
Debentures (including a redemption) in an amount equal to the difference
between the amount realized (which, for this purpose, will exclude amounts
attributable to accrued interest not previously included in income as interest
or OID) and the United States Holder's adjusted tax basis in the Debentures
sold or redeemed. The tax basis of a United States Holder in its Debentures
would be increased by any OID included in income and decreased by any
subsequent payments of interest. A United States Holder that disposed of
Debentures during an Extension Period may recognize a capital loss because the
market value of the Debentures may not fully reflect interest accrued as OID
during such Extension Period. Gain or loss recognized by a United States
Holder on Debentures held for more than one year will generally be taxable as
long-term capital gain or loss. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The amount of interest paid or OID accrued, if any, on Debentures held of
record by United States Holders (other than corporations and other exempt
holders) will be reported annually to the IRS. It is anticipated that such
interest or OID will be reported to holders on Form 1099 and delivered by
January 31 following each calendar year.
"Backup withholding" at a rate of 31% will apply to payments of interest to
non-exempt United States Holders unless the holder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
Regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
Payment of the proceeds from the disposition of Debentures to or through the
United States office of a broker is subject to information reporting and
backup withholding unless the holder or beneficial owner establishes an
exemption from information reporting and backup withholding.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against the holder's United States federal income tax
liability, provided the required information is furnished to the IRS.
UNDERWRITING
Lehman Brothers Inc. (the "Underwriter") has agreed to purchase and the
Company has agreed to sell to the Underwriter the Debentures. The Underwriting
Agreement provides that the obligation of the Underwriter is subject to
certain conditions precedent, and that the Underwriter will be obligated to
purchase all of the Debentures if any are purchased.
The Company has been advised by the Underwriter that it proposes to offer
the Debentures to the public initially at the price to public set forth on the
cover page of this Prospectus Supplement and to certain dealers at such price
less a concession not in excess of 0.600% of the principal amount of the
Debentures; that the Underwriter and such dealers may reallow a discount not
in excess of 0.300% of the principal amount of the Debentures on sales to
certain other dealers; and that after the initial public offering, the price
to public and concession and discount to dealers may be changed by the
Underwriter.
S-10
<PAGE>
The Debentures are a new issue of securities with no established trading
market. The Company does not intend to apply for listing of the Debentures on
a national securities exchange, but has been advised by the Underwriter that
it presently intends to make a market in the Debentures, as permitted by
applicable laws and regulations. The Underwriter is not obligated, however, to
make a market in the Debentures and any such market making may be discontinued
at any time at the sole discretion of the Underwriter. Accordingly, no
assurance can be given as to the liquidity of, or the trading market for, the
Debentures.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. The Underwriter has agreed to reimburse the Company for certain
expenses incurred in connection with the offering of the Debentures.
LEGAL MATTERS
Statements as to United States taxation in this Prospectus Supplement under
the caption "United States Taxation" have been passed upon for the Company by
Winthrop, Stimson, Putnam & Roberts, acting as special tax counsel to the
Company, and are stated herein on their authority as experts. Such firm is
also acting as counsel to the Underwriter in connection with the offering of
the Debentures.
S-11
<PAGE>
PROSPECTUS
$225,000,000
UNION ELECTRIC COMPANY
FIRST MORTGAGE BONDS
DEBT SECURITIES
----------------
Union Electric Company (the "Company") intends to offer from time to time,
in one or more transactions, up to $225,000,000 aggregate principal amount of
First Mortgage Bonds (the "New Bonds") and other debt securities (the "New
Debt Securities", and together with the New Bonds, the "Securities") or any
combination thereof, in one or more series at prices and on terms to be
determined at the time or times of sale. The aggregate principal amount, rate
of interest (which may be fixed or variable) or method of calculation thereof,
interest payment dates, maturity, initial public offering price, provision of
security, any terms for redemption, any sinking fund provisions, any
subordination or interest deferral provisions (in the case of the New Debt
Securities only), the names of any underwriters or agents, the principal
amounts to be purchased by underwriters, the compensation of such underwriters
or agents and other specific terms of each series of Securities in respect of
which this Prospectus is being delivered (the "Offered Bonds" or the "Offered
Debt Securities", as the case may be, and together, the "Offered Securities")
will be set forth, to the extent applicable, in an accompanying prospectus
supplement (the "Prospectus Supplement"). If applicable to the Offered
Securities, the Prospectus Supplement will also contain information concerning
certain United States federal income tax considerations.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The Company intends to sell the Securities through underwriters, dealers,
agents or directly to a limited number of purchasers. The names of, and the
principal amounts to be purchased by or through, underwriters, dealers or
agents, if any, the compensation of such persons and other special terms in
connection with the offering and sale of such Offered Securities will be set
forth in the Prospectus Supplement. See "Plan of Distribution" herein.
----------------
The date of this Prospectus is December 10, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Information as of particular dates concerning directors and
officers, their remuneration, the principal holders of securities of the
Company and any material interest of such persons in transactions with the
Company is disclosed in reports of the Company filed with the Commission. Such
reports and other information can be inspected and copied at the offices of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C.; 500 West Madison Street, Suite 1400, Chicago, Illinois; or
in the Public Reference Room, 13th Floor, 7 World Trade Center, New York, New
York. Copies of such material can also be obtained at prescribed rates from
the Public Reference Section of the Commission at its principal office at 450
Fifth Street, N.W., Washington, D.C. 20549. Such material can also be
inspected and copied at the office of the New York Stock Exchange, 20 Broad
Street, New York, New York. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
reporting companies under the Exchange Act, including the Company, at
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed by the Company with the Commission
pursuant to the Exchange Act (File No. 1-2967), are incorporated herein by
reference:
(1) The Company's Annual Report on Form 10-K for the year ended December
31, 1995 (the "Form 10-K Annual Report"); and
(2) The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996 and September 30, 1996 (the "Form 10-Q
Reports").
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering made by this
Prospectus shall be deemed to be incorporated by reference and to be a part
hereof from the date of filing of such documents; provided that all documents
so filed in each year during which the offering made by this Prospectus is in
effect shall not be incorporated herein by reference or be a part hereof from
and after the date of filing of the Company's Annual Report on Form 10-K for
such year.
Any statement contained in a document incorporated herein by reference shall
be deemed to be modified or superseded for all purposes to the extent that a
statement contained herein or in any other subsequently filed document that is
also incorporated by reference modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO
WHOM THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH
PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY
REFERENCE, OTHER THAN CERTAIN EXHIBITS TO SUCH DOCUMENTS. REQUESTS FOR SUCH
COPIES SHOULD BE DIRECTED TO MR. JAMES C. THOMPSON, SECRETARY, UNION ELECTRIC
COMPANY, P.O. BOX 149, ST. LOUIS, MISSOURI 63166, OR TELEPHONE (314) 621-3222.
THE INFORMATION RELATING TO THE COMPANY CONTAINED IN THIS PROSPECTUS DOES NOT
PURPORT TO BE COMPREHENSIVE AND SHOULD BE READ TOGETHER WITH THE INFORMATION
CONTAINED IN THE DOCUMENTS INCORPORATED BY REFERENCE.
Neither the delivery of this Prospectus nor any sale made hereunder shall,
under any circumstances, create an implication that there has been no change
in the affairs of the Company since the date hereof.
2
<PAGE>
THE COMPANY
The Company, incorporated in Missouri in 1922, is successor to a number of
companies, the oldest of which was organized in 1881. It is the largest
electric utility in the State of Missouri and supplies electric service in
territories in Missouri and Illinois having an estimated population of
2,600,000 within an area of approximately 24,500 square miles, including the
greater St. Louis area. Retail gas service is supplied in 90 Missouri
communities and in the City of Alton, Illinois and vicinity. The Company's
principal office is at 1901 Chouteau Avenue, St. Louis, Missouri 63103 and its
telephone number is (314) 621-3222.
On August 11, 1995, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with CIPSCO Incorporated ("CIPSCO") and Ameren
Corporation ("Ameren"), a newly formed entity, 50% owned by the Company and
50% owned by CIPSCO, pursuant to which, among other things, the Company and
CIPSCO will be merged with Ameren (the "Merger"). Subsequent to the Merger,
the Company and Central Illinois Public Service Company and CIPSCO Investment
Company (wholly owned subsidiaries of CIPSCO), will continue as wholly owned
subsidiaries of Ameren. The holders of the common stock of the Company and
CIPSCO will receive shares of Ameren in the Merger. The Merger is expected to
be tax-free for income tax purposes and will be accounted for under the
"pooling of interests" method of accounting.
After the Merger, Ameren will become a registered public utility holding
company under the Public Utility Holding Company Act of 1935, as amended. In
December 1995, the Merger was approved by the shareholders of the Company and
CIPSCO. However, the Merger is still conditioned upon, among other things,
receipt of certain regulatory and governmental approvals.
Consummation of the Merger will not affect the Company's obligation with
respect to the Securities or its other indebtedness.
USE OF PROCEEDS
As more specifically set forth in the applicable Prospectus Supplement, the
Company proposes to apply the proceeds from the sale of the Offered Securities
to redeem, discharge or refund existing long-term debt or preferred stock or
to reimburse the Company's treasury for expenditures made for such purposes,
or to repay all or a portion of short-term borrowings outstanding.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
1991 1992 1993 1994 1995 SEPTEMBER 30, 1996
---- ---- ---- ---- ---- -------------------
<S> <C> <C> <C> <C> <C> <C>
4.21 4.66 4.66 4.68 4.78 4.85
</TABLE>
For the purpose of computing the ratio of earnings to fixed charges,
earnings consist of net income plus taxes based on income and fixed charges.
Fixed charges consist of interest on debt, amortization of debt discount,
premium and expense, and a portion of rentals which is deemed representative
of the interest factor.
DESCRIPTION OF NEW BONDS
GENERAL. The New Bonds are to be issued under the Indenture of Mortgage and
Deed of Trust dated June 15, 1937 between the Company and Boatmen's Trust
Company, as trustee (the "Mortgage Trustee"), as amended and supplemented by
supplemental indentures, including one or more supplemental indentures
relating to the Offered Bonds (collectively, the "Mortgage").
The following statements about the Mortgage, the New Bonds and the mortgage
indentures of two of the Company's former utility subsidiaries are summary
outlines of provisions contained therein, do not purport to be
3
<PAGE>
complete and are qualified in their entirety by reference thereto. The
specific references below are to provisions of the Mortgage unless otherwise
indicated. Certain terms used below without definition are defined in the
Mortgage. The term "Bonds" refers to all Bonds (including the New Bonds)
issued under the Mortgage. Copies of the Mortgage (other than supplemental
indentures thereto that only convey property) and the mortgage indentures and
supplements and amendments thereto of two of the Company's former utility
subsidiaries are filed as exhibits to the Registration Statement of which this
Prospectus forms a part.
Reference is made to the applicable Prospectus Supplement for a series of
the New Bonds for a description of the following terms of such series of New
Bonds in respect of which this Prospectus is being delivered: (i) the title
(series designation) of such New Bonds; (ii) the date or dates on which the
principal of such New Bonds is payable; (iii) the rate or rates at which such
New Bonds will bear interest; the date or dates from which such interest will
accrue; the dates on which such interest will be payable and the regular
record dates for the interest payable on such interest payment dates; (iv) the
bases on which the New Bonds will be issued; (v) the option, if any, of the
Company to redeem such New Bonds and the periods within which or the dates on
which, the prices at which and the terms and conditions upon which, such New
Bonds may be redeemed; (vi) the obligation, if any, of the Company to redeem
or purchase such New Bonds pursuant to any sinking fund or at the option of
the holder and the terms and conditions upon which such New Bonds will be
redeemed pursuant to such obligation; and (vii) any other terms of such New
Bonds not inconsistent with the provisions of the Mortgage.
The New Bonds are to be issued as registered Bonds without coupons in
denominations of $1,000 or multiples thereof. The New Bonds may be exchanged
for other New Bonds of different authorized denominations and may be
transferred without charge to the holders thereof other than for applicable
governmental taxes. Notwithstanding the foregoing, the Company shall not be
required to transfer or exchange any New Bond (i) during a period beginning at
the opening of business 15 days before any selection of New Bonds to be
redeemed and ending at the close of business on the day notice of redemption
is mailed, or (ii) called or being called for redemption in whole or in part,
except, in the case of any New Bond to be redeemed in part, the portion
thereof not so to be redeemed.
The Company reserves the right to provide in the supplemental indenture for
any Offered Bonds to permit the issuance of such Offered Bonds in book-entry
form. See "Global Securities" herein.
Principal and interest are payable at the office of the Company in St.
Louis, Missouri, provided that, at the option of the Company, interest may be
paid by checks mailed to the registered owners of the New Bonds. Interest,
other than defaulted interest, will be payable to the person in whose name any
New Bond is registered at the close of business on the 15th day of the month
next preceding a month containing an interest payment date (or, if such 15th
day shall be a legal holiday in the State of New York or in the State of
Missouri or a day when banking institutions in the Borough of Manhattan, The
City of New York, or St. Louis, Missouri are authorized by law to close, the
next preceding day which shall not be a legal holiday or a day on which such
institutions are so authorized to close). See also "Global Securities" herein.
There is no improvement, maintenance or analogous fund for the New Bonds
similar to the funds provided for one outstanding series of Bonds. The holders
of the outstanding Bonds will not have any specific contractual protection in
the event the Company becomes involved in a highly leveraged transaction.
SECURITY. In the opinion of the Vice President and General Counsel of the
Company, the New Bonds will be secured, together with all other Bonds now or
hereafter issued under the Mortgage, by a valid and direct first lien (subject
to certain leases, Permitted Liens and other minor defects) on substantially
all the properties and franchises of the Company other than cash, accounts
receivable and other liquid assets, securities not specifically pledged and
electric energy, materials, supplies or other products produced or purchased
by the Company for use, sale or lease, and certain properties acquired in the
1983 mergers with two former utility subsidiaries, which properties are
subject to the prior liens of their respective indentures.
4
<PAGE>
The Mortgage contains provisions subjecting after-acquired property (with
certain exceptions) to the lien of the Mortgage. The indentures of the merged
subsidiaries subject to the prior lien thereof after-acquired property
constituting (with certain exceptions) additions, extensions, improvements,
repairs, and replacements appurtenant to properties acquired in the mergers,
and one such indenture subjects to the lien thereof after-acquired property
situated in the territory formerly served by the former subsidiary.
ISSUANCE OF ADDITIONAL BONDS. Additional Bonds ranking equally with the New
Bonds may be issued up to (i) 60% of the Net Bondable Value of Property
Additions not subject to an Unfunded Prior Lien, (ii) the amount of Bonds
retired or to be retired (except out of trust estate money) or (iii) the
amount of cash deposited with the Mortgage Trustee for such purpose, which
cash may thereafter be withdrawn upon the same basis that additional Bonds are
issuable under (i) and (ii). (Arts. III and VIII.) Unless otherwise stated in
the applicable Prospectus Supplement, the Offered Bonds will be issued against
the deposit of cash, which cash will be concurrently withdrawn under clause
(ii) above. At September 30, 1996, the aggregate principal amount of Bonds
issuable under clause (i) above was approximately $1.2 billion (without giving
effect to the issuance of New Bonds), and approximately $665 million principal
amount of Bonds could be issued under clause (ii) above.
Additional Bonds may not be issued (i) unless Net Earnings of the Company
Available for Interest and Property Retirement Appropriations for 12
consecutive months within the 15 months preceding such issuance shall have
been equal to the greater of twice the annual interest charges on, or 10% of
the principal amount of, all Bonds and Prior Lien Bonds then outstanding and
then being issued, nor (ii) unless Net Earnings of the Company Available for
Interest After Property Retirement Appropriations for such periods shall have
been equal to twice the annual interest on all such Bonds and Prior Lien
Bonds. Such earnings tests need not be complied with to issue Bonds to refund
Bonds theretofore issued, or to refund a Prior Lien which simultaneously
becomes a Funded Prior Lien upon the Property Additions made on the basis of
such application, if application to issue additional Bonds for either of these
two purposes is made at any time after a date two years prior to the maturity
of the Bonds or Prior Lien Bonds being refunded. (Art. III, Secs. 3, 4 and 6;
Supplemental Indenture, Art. IV, Sec. 4.) The ratio under the test
set forth under (ii) above, which is more restrictive than the test set forth
under (i) above, was 6.6 for the twelve months ended September 30, 1996, and
would permit the Company (without giving effect to the issuance of the New
Bonds) to issue an additional $3.0 billion of First Mortgage Bonds (7.5%
annual interest rate assumed). Net Earnings of the Company Available for
Interest After Property Retirement Appropriations is defined as total
operating revenues and net non-operating revenues, less operating expenses
(other than income taxes) and less the greater of (i) the provisions for
depreciation and expenditures for maintenance and repairs for the period in
question or (ii) 15% of gross operating revenues (as defined) for the period
in question. [(July 1956 Supplemental Indenture, Art. V, Sec. 2.)]
Prior Lien Bonds secured by an Unfunded Prior Lien (such as bonds issuable
under the indentures of the two former utility subsidiaries discussed above
under "Security") may be issued under the circumstances and subject to the
conditions and limitations contained in the Mortgage and the subsidiaries'
indentures referred to above. (Art. IV, Secs. 15 and 16;
Supplemental Indenture, Art. IV, Sec. 4.) The Company has no plans to issue
any such bonds and is in the process of extinguishing the lien of one of the
subsidiaries' indentures, under which no bonds are outstanding.
DIVIDEND RESTRICTION. There are no dividend restrictions applicable to the
New Bonds. However, so long as Bonds of certain prior series are outstanding,
the Company will not declare any dividend on its Common Stock (other than in
Common Stock) or make any distribution on or acquire for value any of its
Common Stock (otherwise than in exchange for, or out of proceeds of sale of,
Common Stock) if the amount thereof, together with the aggregate of all
payments made since June 30, 1961 would exceed $22,700,000 plus the net income
applicable to the Common Stock subsequent to June 30, 1961. (See, e.g., May
1990 Supplemental Indenture, Art. IV, Sec. 6.)
MODIFICATION OF THE MORTGAGE. With the consent of the holders of 80% of the
Bonds and 80% in amount of Bonds of each affected series if less than all are
affected, the Mortgage may be changed except to affect the terms of payment of
the principal or interest on any Bond or to reduce the percentage of
Bondholders required
5
<PAGE>
to effect any change. (Art. XV.) The Company has reserved the right to amend
the Mortgage without any consent or other action by holders of Bonds of any
series created by the Supplemental Indenture of August 16, 1976, or by any
supplemental indenture dated thereafter, including the holders of the New
Bonds, so as to substitute for the foregoing provision a provision to the
effect that the Mortgage may be modified or altered and the rights of the
holders of Bonds may be affected with the consent of the holders of 60% of the
Bonds; and if less than all series of Bonds are affected, the consent also of
the holders of 60% of the Bonds of each series affected. Additionally, the
Company has reserved the right to amend the Mortgage, as supplemented, to
authorize amendments thereto by an appropriate written consent of the holders
of 60% of the Bonds without a meeting of such Bondholders. (
Supplemental Indenture, Art. VII.)
The Mortgage may be amended without a meeting of Bondholders to cure
ambiguities or defects and may be so modified under certain other
circumstances, provided that no such modification shall impair any of the
rights of the Bondholders or of the Mortgage Trustee.
Insofar as the holders of the Bonds of all series issued subsequent to the
February 1974 Supplemental Indenture, including the New Bonds, are concerned,
the Mortgage is amended by the February 1974 Supplemental Indenture (Art.
VII.) to include construction work in progress on nuclear facilities and
nuclear fuel as bondable property. ( Supplemental Indenture, Art.
VI.)
DEFAULTS. Defaults are defined as being: default in payment of principal;
default for 30 days in payment of interest or satisfaction of the Company's
obligations respecting any sinking, improvement, maintenance or analogous
fund; default in payment of principal of, or interest on, any Prior Lien
Bonds; certain events in bankruptcy, insolvency or reorganization; default in
other covenants for 60 days after notice by the Mortgage Trustee or the
holders of 15% of the outstanding Bonds; failure under certain circumstances
to discharge, or provide for, judgments; or termination of corporate franchise
without continuance of business by a successor corporation. (Art. IX, Sec. 1.)
The Mortgage Trustee or the holders of not less than 25% of the outstanding
Bonds may declare the entire principal due on default, but the holders of a
majority of outstanding Bonds may annul such declaration if such default has
been cured. (Art. IX, Sec. 1.) The Mortgage Trustee is required to enforce the
lien of the Mortgage upon request of the holders of a majority in amount of
the outstanding Bonds on default. (Art. IX, Sec. 4.) The Mortgage Trustee has
no obligations to exercise any of its trusts or powers at the request of any
of the Bondholders unless indemnified to its satisfaction, but the Mortgage
Trustee is not relieved of its obligation to act upon the occurrence of an
event of default. (Art. XIII, Sec. 1.)
The Mortgage provides that the Mortgage Trustee, within 90 days after the
occurrence of any default thereunder with respect to a series of New Bonds, is
required to give the holders of such series notice of any default known to it,
unless cured or waived; provided, however, that except in the case of a
default in the payment of principal, interest or any sinking fund installment,
if any, on any New Bonds of such series, the Mortgage Trustee may withhold
such notice if the Mortgage Trustee and the Board of Directors determine that
it is in the interest of such holders to do so. (Art. XIII, Sec. 3.)
EVIDENCE TO BE FURNISHED TO THE MORTGAGE TRUSTEE. Compliance with Mortgage
provisions is evidenced by written statements by Company officers, opinions of
counsel and certificates of an engineer, accountant, appraiser or other expert
(who in some instances must be independent). The Company is required to file
various certificates and other reports annually, including, without
limitation, an annual certificate evidencing compliance with all conditions
and covenants without regard to any period of grace or notice requirements,
and in certain events.
CONCERNING THE MORTGAGE TRUSTEE. The Mortgage Trustee under the Mortgage is
Trustee under the Indenture and the trustee under a trust agreement
establishing a pension trust for the payment of retirement income for
employees of the Company. The Mortgage Trustee also serves as trustee for the
Company's Savings Investment Plan and nuclear decommissioning trust. John
Peters MacCarthy, a director of the Company, is also a director of the
Mortgage Trustee.
6
<PAGE>
DESCRIPTION OF NEW DEBT SECURITIES
GENERAL. The New Debt Securities may be issued in one or more new series
under an Indenture or Indentures (the "Indenture") between the Company and
Boatmen's Trust Company, as trustee (the "Trustee"). The following statements
about the Indenture, one or more supplemental indentures, board resolutions or
officer's certificates establishing the New Debt Securities and the New Debt
Securities (the forms of each of which are filed, or will be filed, as
exhibits to the Registration Statement of which this Prospectus forms a part,
or as an exhibit to a Current Report on Form 8-K to be incorporated by
reference in this Prospectus) are summary outlines of provisions contained
therein, do not purport to be complete and are qualified in their entirety by
reference thereto. Such statements make use of the terms defined in the
Indenture and are qualified in their entirety by express reference to the
sections of the Indenture cited herein.
The New Debt Securities will be unsecured obligations of the Company and, if
so provided in the Prospectus Supplement relating to a particular series of
New Debt Securities, will be subordinated obligations of the Company (the
"Subordinated New Debt Securities"). Except as may otherwise be described in
the Prospectus Supplement, separate Indentures will be used for Subordinated
Debt Securities (the "Subordinated Indenture") and for New Debt Securities
that are not Subordinated New Debt Securities.
Reference is made to the Prospectus Supplement relating to any particular
issue of Offered New Debt Securities for the following terms: (1) the title of
such Offered New Debt Securities; (2) any limit on the aggregate principal
amount of such Offered Debt Securities or the series of which they are a part;
(3) the date or dates on which the principal of any of such Offered Debt
Securities will be payable; (4) the rate or rates (which may be fixed or
variable) and/or the method of determination of such rate or rates at which
any of such Offered Debt Securities will bear interest, if any, the date or
dates from which any such interest will accrue, the Interest Payment Dates on
which any such interest will be payable and the Regular Record Date for any
such interest payable on any Interest Payment Date; (5) the place or places
where the principal of, premium, if any, and interest on any of such Offered
Debt Securities will be payable; (6) the period or periods within which the
terms and conditions upon which any Offered Debt Securities may be redeemed,
in whole or in part, at the option of the Company; (7) the obligation or
obligations, if any, of the Company to redeem or purchase any Offered Debt
Securities pursuant to any mandatory redemption provisions or at the option of
the Holder thereof, and the terms and conditions upon which any Offered Debt
Securities shall be redeemed or purchased; (8) the denominations in which any
of Offered Debt Securities will be issuable, if other than denominations of
$1,000 and any integral multiple thereof; (9) if the amount payable in respect
of principal of or any premium or interest on such Offered Debt Securities may
be determined with reference to an index or other fact or event ascertainable
outside the Indenture, the manner in which such amounts will be determined;
(10) if other than the principal amount thereof, the portion of the principal
amount of any Offered Debt Securities which shall be payable upon declaration
of acceleration of the Maturity thereof; (11) the terms, if any, pursuant to
which such Offered Debt Securities may be converted into or exchanged for
shares of capital stock or other securities of the Company or any other
Person; (12) if such Offered Debt Securities are to be issued in global form,
(i) any limitations on the rights of the Holder or Holders of such Offered
Debt Securities to transfer or exchange the same or to obtain the registration
of transfer thereof, (ii) any limitations on the rights of the Holder or
Holders thereof to obtain certificates therefor in definitive form in lieu of
temporary form and (iii) any and all other matters incidental to such Offered
Debt Securities; (13) any addition to the Events of Default applicable to such
Offered Debt Securities and any addition to the covenants of the Company for
the benefit of the Holders of such Offered Debt Securities; (14) any interest
deferral provisions; and (15) any other terms of such Offered Debt Securities
of such series, or any Tranche thereof, not inconsistent with the provisions
of the Indenture. (Sec. 301.)
New Debt Securities may be sold at a substantial discount below their
principal amount. Certain special United States federal income tax
considerations (if any) applicable to New Debt Securities sold at an original
issue discount may be described in the applicable Prospectus Supplement. In
addition, certain special United States federal income tax or other
considerations (if any) applicable to any New Debt Securities which are
denominated in a currency or currency unit other than Dollars may be described
in the applicable Prospectus Supplement.
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The Company reserves the right to provide in the supplemental indenture or
board resolutions for any series of Offered Debt Securities to permit the
issuance of such Offered Debt Securities in book-entry form. See "Global
Securities" herein.
Except as may otherwise be described in the Prospectus Supplement, the
covenants contained in the Indenture would not afford Holders of New Debt
Securities protection in the event of a highly-leveraged transaction involving
the Company.
SUBORDINATION. If so provided in the applicable Prospectus Supplement, the
Subordinated Debt Securities will be subordinate and junior in right of
payment to all Senior Indebtedness of the Company.
No payment of principal of (including redemption and sinking fund payments),
premium, if any, or interest on, the Subordinated Debt Securities may be made
if any Senior Indebtedness is not paid when due, any applicable grace period
with respect to such default has ended and such default has not been cured or
waived, or if the maturity of any Senior Indebtedness has been accelerated
because of a default. Upon any distribution of assets of the Company to
creditors upon any dissolution, winding-up, liquidation or reorganization,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all principal of, and premium, if any, and interest due or
to become due on, all Senior Indebtedness must be paid in full before the
Holders of the Subordinated Debt Securities are entitled to receive or retain
any payment. (Sec. 1502.) The rights of the Holders of the Subordinated Debt
Securities will be subrogated to the rights of the Holders of Senior
Indebtedness to receive payments or distributions applicable to Senior
Indebtedness until all amounts owing on the Subordinated Debt Securities are
paid in full. (Sec. 1504.)
The term "Senior Indebtedness" is defined in the Subordinated Indenture to
mean obligations (other than non-recourse obligations, the indebtedness issued
under the Subordinated Indenture and other indebtedness which is expressly
made subordinate to or pari passu with the Subordinated Debt Securities) of,
or guaranteed or assumed by, the Company for borrowed money (including both
senior and subordinated indebtedness for borrowed money (other than the
Subordinated Debt Securities)) or for the payment of money relating to any
lease which is capitalized on the balance sheet of the Company in accordance
with generally accepted accounting principles as in effect from time to time,
or indebtedness evidenced by bonds, debentures, notes or other similar
instruments, and in each case, amendments, renewals, extensions, modifications
and refundings of any such indebtedness or obligations, whether existing as of
the date of the Subordinated Indenture or subsequently incurred by the
Company.
The Subordinated Indenture does not limit the aggregate amount of Senior
Indebtedness that the Company may issue. As of September 30, 1996, outstanding
Senior Indebtedness of the Company aggregated approximately $1.8 billion.
FORM, EXCHANGE, AND TRANSFER. Unless otherwise specified in the applicable
Prospectus Supplement, the New Debt Securities of each series will be issuable
only in fully registered form without coupons and in denominations of $1,000
and any integral multiple thereof. (Secs. 201 and 302.)
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to global securities, New Debt Securities of any series
will be exchangeable for other New Debt Securities of the same series, of any
authorized denomination and of like tenor and aggregate principal amount.
(Sec. 305.)
Subject to the terms of the Indenture and the limitations applicable to
global securities, New Debt Securities may be presented for exchange as
provided above or for registration of transfer (duly endorsed or accompanied
by a duly executed instrument of transfer) at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose. The Company may designate itself the Security Registrar. No
service charge will be made for any registration of transfer or exchange of
New Debt Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
Such transfer or exchange will be effected upon the Security Registrar or such
transfer
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agent, as the case may be, being satisfied with the documents of title and
identity of the person making the request. (Sec. 305.) Any transfer agent (in
addition to the Security Registrar) initially designated by the Company for
any New Debt Securities will be named in the applicable Prospectus Supplement.
The Company may at any time designate additional transfer agents or rescind
the designation of any transfer agent or approve a change in the office
through which any transfer agent acts, except that the Company will be
required to maintain a transfer agent in each Place of Payment for the New
Debt Securities of each series. (Sec. 602.)
The Company will not be required to (i) issue, register the transfer of, or
exchange any Debt Security or any Tranche thereof during a period beginning at
the opening of business 15 days before the day of mailing of a notice of
redemption of any such Debt Security called for redemption and ending at the
close of business on the day of such mailing or (ii) register the transfer of
or exchange any Debt Security so selected for redemption, in whole or in part,
except the unredeemed portion of any such Debt Security being redeemed in
part. (Sec. 305.)
PAYMENT AND PAYING AGENTS. Unless otherwise indicated in the applicable
Prospectus Supplement, payment of interest on a Debt Security on any Interest
Payment Date will be made to the person in whose name such Debt Security (or
one or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest. (Sec. 307.)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the New Debt Securities of a
particular series will be payable at the office of such Paying Agent or Paying
Agents as the Company may designate for such purpose from time to time. Unless
otherwise indicated in the applicable Prospectus Supplement, the Company, at
its office in St. Louis, Missouri, will be designated as the sole Paying Agent
for payments with respect to New Debt Securities of each series. Any other
Paying Agents initially designated by the Company for the New Debt Securities
of a particular series will be named in the applicable Prospectus Supplement.
The Company may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent or approve a change in the office through
which any Paying Agent acts, except that the Company will be required to
maintain a Paying Agent in each Place of Payment for the New Debt Securities
of a particular series. (Sec. 602.)
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest
has become due and payable will be repaid to the Company, and the Holder of
such Debt Security thereafter may look only to the Company for payment
thereof. (Sec. 603.)
REDEMPTION. Any terms for the optional or mandatory redemption of New Debt
Securities will be set forth in the applicable Prospectus Supplement or a
supplement thereto. Except as shall otherwise be provided in the applicable
Prospectus Supplement with respect to New Debt Securities that are redeemable
at the option of the Holder, New Debt Securities will be redeemable only upon
notice by mail not less than 30 nor more than 60 days prior to the date fixed
for redemption, and, if less than all the New Debt Securities of a series, or
any Tranche thereof, are to be redeemed, the particular New Debt Securities to
be redeemed will be selected by such method as shall be provided for any
particular series, or in the absence of any such provision, by such method of
random selection as the Security Registrar deems fair and appropriate. (Secs.
403 and 404.)
Any notice of redemption at the option of the Company may state that such
redemption will be conditional upon receipt by the Paying Agent or Agents, on
or prior to the dated fixed for such redemption, of money sufficient to pay
the principal of and premium, if any, and interest, if any, on such New Debt
Securities and that if such money has not been so received, such notice will
be of no force and effect and the Company will not be required to redeem such
New Debt Securities. (Sec. 404.)
CONSOLIDATION, MERGER AND SALE OF ASSETS. The Company may not consolidate
with or merge into any other person or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, unless (i)
the corporation formed by such consolidation or into which the Company is
merged or the Person which acquires by conveyance or transfer, or which
leases, the property and assets of the Company substantially as an
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entirety shall be a Person organized and validly existing under the laws of
any domestic jurisdiction and such Person expressly assumes the Company's
obligations on the New Debt Securities and under the Indenture,
(ii) immediately after giving effect to the transaction, no Event of Default,
and no event which, after notice or lapse of time or both, would become an
Event of Default, shall have occurred and be continuing, and (iii) the Company
will have delivered to the Trustee an Officer's Certificate and an Opinion of
Counsel as provided in the Indenture. (Sec. 1101.)
EVENTS OF DEFAULT. Unless otherwise specified in the applicable Prospectus
Supplement, each of the following will constitute an Event of Default under
the Indenture with respect to New Debt Securities of any series: (a) failure
to pay any interest on any New Debt Securities of such series within 60 days
after the same becomes due and payable; (b) failure to pay principal or
premium, if any, on any Debt Security of such series within three Business
Days after the same becomes due and payable; (c) failure to perform or breach
of any other covenant or warranty of the Company in the Indenture (other than
a covenant or warranty of the Company in the Indenture solely for the benefit
of one or more series of New Debt Securities other than such series) for
60 days after written notice to the Company by the Trustee, or to the Company
and the Trustee by the Holders of at least 33% in principal amount of the New
Debt Securities of such series outstanding under the Indenture as provided in
the Indenture; (d) certain events of bankruptcy, insolvency or reorganization;
and (e) any other Event of Default specified in the applicable Prospectus
Supplement with respect to New Debt Securities of particular series. (Sec.
801.)
No Event of Default with respect to the New Debt Securities necessarily
constitutes an Event of Default with respect to the New Debt Securities of any
other series issued under the Indenture.
If an Event of Default with respect to any series of New Debt Securities
occurs and is continuing, then either the Trustee or the Holders of not less
than 33% in principal amount of the Outstanding New Debt Securities of such
series may declare the principal amount (or if the New Debt Securities of such
series are discount notes or similar New Debt Securities, such portion of the
principal amount as may be specified in the applicable Prospectus Supplement)
of all of the New Debt Securities of such series to be due and payable
immediately; provided, however, that if an Event of Default occurs and is
continuing with respect to more than one series of New Debt Securities, the
Trustee or the Holders of not less than 33% in aggregate principal amount of
the Outstanding Debt Securities of all such series, considered as one class,
may make such declaration of acceleration and not the Holders of the Debt
Securities of any one of such series.
At any time after the declaration of acceleration with respect to the New
Debt Securities of any series has been made and before a judgment or decree
for payment of the money due has been obtained, the Event or Events of Default
giving rise to such declaration of acceleration will, without further act, be
deemed to have been waived, and such declaration and its consequences will,
without further act, be deemed to have been rescinded and annulled, if
(a) the Company has paid or deposited with the Trustee a sum sufficient to
pay
(1) all overdue interest on all New Debt Securities of such series;
(2) the principal of and premium, if any, on any New Debt Securities of
such series which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate or
rates prescribed therefor in such New Debt Securities;
(3) interest upon overdue interest at the rate or rates prescribed
therefor in such New Debt Securities, to the extent that payment of
such interest is lawful; and
(4) all amounts due to the Trustee under the Indenture;
(b) any other Event or Events of Default with respect to the New Debt
Securities of such series, other than the nonpayment of the principal
of the New Debt Securities of such series which has become due solely
by such declaration of acceleration, have been cured or waived as
provided in the Indenture. (Sec. 802.)
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Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request or direction of any of the Holders, unless such
Holders shall have offered to the Trustee reasonable indemnity. (Sec. 903.)
Subject to such provisions for the indemnification of the Trustee, the Holders
of a majority in principal amount of the Outstanding New Debt Securities of
any series will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Debt Securities of that series. (Sec. 812.)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy thereunder, unless (i) such
Holder has previously given to the Trustee written notice of a continuing
Event of Default with respect to the New Debt Securities of such series, (ii)
the Holders of not less than a majority in aggregate principal amount of the
Outstanding Debt Securities of such series have made written request to the
Trustee, and such Holder or Holders have offered reasonable indemnity to the
Trustee to institute such proceeding as trustee and (iii) the Trustee has
failed to institute such proceeding, and has not received from the Holders of
a majority in aggregate principal amount of the Outstanding Debt Securities of
that series a direction inconsistent with such request, within 60 days after
such notice, request and offer. (Sec. 807.) However, such limitations do not
apply to a suit instituted by a Holder of a Debt Security for the enforcement
of payment of the principal of or any premium or interest on such Debt
Security on or after the applicable due date specified in such Debt Security.
(Sec. 808.)
The Company will be required to furnish to the Trustee annually a statement
by an appropriate officer as to such officer's knowledge of the Company's
compliance with all conditions and covenants under the Indenture, such
compliance to be determined without regard to any period of grace or
requirement of notice under the Indenture. (Sec. 606.)
MODIFICATION AND WAIVER. Without the consent of any Holder of New Debt
Securities, the Company and the Trustee may enter into one or more
supplemental indentures for any of the following purposes: (a) to evidence the
assumption by any permitted successor to the Company of the covenants of the
Company in the Indenture and the New Debt Securities; or (b) to add one or
more covenants of the Company or other provisions for the benefit of the
Holders of all or any series of Outstanding Debt Securities or to surrender
any right or power conferred upon the Company by the Indenture; or (c) to add
any additional Events of Default with respect to all or any series of
Outstanding Debt Securities; or (d) to change or eliminate any provision of
the Indenture or to add any new provision to the Indenture, provided that if
such change, elimination or addition will adversely affect the interests of
the Holders of New Debt Securities of any series in any material respect, such
change, elimination or addition will become effective with respect to such
series only when there is no Debt Security of such series remaining
Outstanding under the Indenture; or (e) to provide collateral security for the
New Debt Securities; or (f) to establish the form or terms of New Debt
Securities of any series as permitted by the Indenture; or (g) to evidence and
provide for the acceptance of appointment of a successor Trustee under
the Indenture with respect to the New Debt Securities of one or more series
and to add to or change any of the provisions of the Indenture as shall be
necessary to provide for or to facilitate the administration of the trusts
under the Indenture by more than one trustee; or (h) to provide for the
procedures required to permit the utilization of a noncertificated system of
registration for any series of New Debt Securities; or (i) to change any place
where (1) the principal of and premium, if any, and interest, if any, on any
New Debt Securities shall be payable, (2) any New Debt Securities may be
surrendered for registration of transfer or exchange and (3) notices and
demands to or upon the Company in respect of New Debt Securities and the
Indenture may be served; or (j) to cure any ambiguity or inconsistency or to
make or change any other provisions with respect to matters and questions
arising under the Indenture, provided such changes or additions shall not
adversely affect the interests of the Holders of New Debt Securities of any
series in any material respect. (Sec. 1201.)
The Holders of not less than a majority in aggregate principal amount of the
Outstanding Debt Securities of any series may waive compliance by the Company
with certain restrictive provisions of the Indenture. (Sec. 607.) The Holders
of a majority in principal amount of the Outstanding Debt Securities of any
series may waive any
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past default under the Indenture, except a default in the payment of
principal, premium, or interest and certain covenants and provisions of the
Indenture that cannot be modified or be amended without the consent of the
Holder of each Outstanding Debt Security of such series affected. (Sec. 813.)
Without limiting the generality of the foregoing, if the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"), is amended after the date of
the Indenture in such a way as to require changes to the Indenture or the
incorporation therein of additional provisions or so as to permit changes to,
or the elimination of, provisions which, at the date of the Indenture or at
any time thereafter, were required by the Trust Indenture Act to be contained
in the Indenture, the Indenture will be deemed to have been amended so as to
conform to such amendment or to effect such changes or elimination, and the
Company and the Trustee may, without the consent of any Holders, enter into
one or more supplemental indentures to evidence or effect such amendment.
(Sec. 1201.)
Except as provided above, the consent of the Holders of not less than a
majority in aggregate principal amount of the New Debt Securities of all
series then Outstanding, considered as one class, is required for the purpose
of adding any provisions to, or changing in any manner, or eliminating any of
the provisions of, the Indenture pursuant to one or more supplemental
indentures; provided, however, that if less than all of the series of New Debt
Securities Outstanding are directly affected by a proposed supplemental
indenture, then the consent only of the Holders of a majority in aggregate
principal amount of Outstanding Debt Securities of all series so directly
affected, considered as one class, will be required; and provided, further,
that if the New Debt Securities of any series have been issued in more than
one Tranche and if the proposed supplemental indenture directly affects the
rights of the Holders of one or more, but less than all, such Tranches, then
the consent only of the Holders of a majority in aggregate principal amount of
the Outstanding Debt Securities of all Tranches so directly affected,
considered as one class, will be required; and provided further, that no such
amendment or modification may (a) change the Stated Maturity of the principal
of, or any installment of principal of or interest on, any Debt Security, or
reduce the principal amount thereof or the rate of interest thereon (or the
amount of any installment of interest thereon) or change the method of
calculating such rate or reduce any premium payable upon the redemption
thereof, or reduce the amount of the principal of any Discount Security that
would be due and payable upon a declaration of acceleration of Maturity or
change the coin or currency (or other property) in which any Debt Security or
any premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity of any Debt Security (or, in the case of redemption, on or after the
redemption date) without, in any such case, the consent of the Holder of such
Debt Security, (b) reduce the percentage in principal amount of the
Outstanding Debt Securities of any series, or any Tranche thereof, the consent
of the Holders of which is required for any such supplemental indenture, or
the consent of the Holders of which is required for any waiver of compliance
with any provision of the Indenture or any default thereunder and its
consequences, or reduce the requirements for quorum or voting, without, in any
such case, the consent of the Holder of each Outstanding Debt Security of such
series or Tranche, or (c) modify certain of the provisions of the Indenture
relating to supplemental indentures, waivers of certain covenants and waivers
of past defaults with respect to the New Debt Securities of any series, or any
Tranche thereof, without the consent of the Holder of each Outstanding Debt
Security affected thereby. A supplemental indenture which changes or
eliminates any covenant or other provision of the Indenture which has
expressly been included solely for the benefit of one or more particular
series of New Debt Securities or one or more Tranches thereof, or modifies the
rights of the Holders of New Debt Securities of such series or Tranches with
respect to such covenant or other provision, will be deemed not to affect the
rights under the Indenture of the Holders of the New Debt Securities of any
other series or Tranche. (Sec. 1202.)
The Indenture provides that in determining whether the Holders of the
requisite principal amount of the Outstanding Debt Securities have given or
taken any direction, notice, consent, waiver, or other action under the
Indenture as of any date, (i) New Debt Securities owned by the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor (unless the Company, such Affiliate or such obligor owns all
Securities Outstanding under this Indenture, or all Outstanding Securities of
each such series and each such Tranche, as the case may be, determined without
regard to this clause (i)) shall be disregarded and deemed
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not to be Outstanding; (ii) the principal amount of a Discount Security that
shall be deemed to be Outstanding for such purposes shall be the amount of the
principal thereof that would be due and payable as of the date of such
determination upon a declaration of acceleration of the Maturity thereof as
provided in the Indenture; and (iii) the principal amount of a Debt Security
denominated in one or more foreign currencies or a composite currency that
will be deemed to be Outstanding will be the Dollar equivalent, determined as
of such date in the manner prescribed for such Debt Security, of the principal
amount of such Debt Security (or, in the case of a Debt Security described in
clause (ii) above, of the amount described in such clause). (Sec. 101.)
If the Company shall solicit from Holders any request, demand,
authorization, direction, notice, consent, election, waiver or other Act, the
Company may, at its option, by Board Resolution, fix in advance a record date
for the determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, election, waiver or other Act, but
the Company shall have no obligation to do so. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, election,
waiver or other Act may be given before or after such record date, but only
the Holders of record at the close of business on the record date shall be
deemed to be Holders for the purposes of determining whether Holders of the
requisite proportion of the Outstanding Securities have authorized or agreed
or consented to such request, demand, authorization, direction, notice,
consent, waiver or other Act, and for that purpose the Outstanding Securities
shall be computed as of the record date. Any request, demand, authorization,
direction, notice, consent, election, waiver or other Act of a Holder shall
bind every future Holder of the same Security and the Holder of every Security
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by
the Trustee or the Company in reliance thereon, whether or not notation of
such action is made upon such Security. (Sec. 104.)
SATISFACTION AND DISCHARGE; DEFEASANCE. Unless otherwise indicated in the
applicable Prospectus Supplement, the Indenture, with respect to any and all
series of New Debt Securities (except for certain specified surviving
obligations) will be discharged and canceled upon the satisfaction of certain
conditions, including: (a) the payment in full of the principal of (and
premium, if any) and interest on all series of the New Debt Securities or the
deemed payment in full of such New Debt Securities, as described below; (b)
the payment by the Company of all other sums required under the Indenture; and
(c) the delivery of a certificate by the Company to the Trustee stating that
all conditions precedent relating to the satisfaction and discharge of the
Indenture have been complied with.
In addition, the Company may at any time (i) terminate certain of its
obligations under the Indenture with respect to New Debt Securities of any
series ("legal defeasance") or (ii) terminate its obligations under certain
covenants set forth in the Indenture with respect to New Debt Securities of
any series (after which any omission to comply with such obligations shall not
constitute a Default with respect to such New Debt Securities) ("covenant
defeasance"). To exercise either legal defeasance or covenant defeasance, the
Company must irrevocably deposit in trust with the Trustee, for the benefit of
the Holders, cash or Eligible Obligations, or a combination thereof, in such
amounts as will be sufficient to pay the principal of and premium and
interest, if any, due and to become due on the New Debt Securities of such
series on or prior to their redemption or maturity date in accordance with the
terms of the Indenture and such New Debt Securities; provided that either (i)
such money or the proceeds of such Eligible Obligations shall have been on
deposit with the Trustee for a period of at least 90 days, or (ii) the Trustee
shall have received an Opinion of Counsel to the effect that payments to
Holders with such moneys as proceeds are not recoverable as a preference under
any applicable United States federal or state law relating to bankruptcy,
insolvency, receivership, winding-up, liquidation, reorganization or relief of
debtors. The Company must also comply with certain other conditions, including
(under certain circumstances) the delivery of an Opinion of Counsel to the
effect that the Holder of such Debt Securities will not realize income, gain
or loss for federal income tax purposes as a result of such defeasance, and
will realize income, gain or loss on the New Debt Securities, including
payments of interest thereon, on the same amounts, in the same manner and at
the same times as would have been the case if such defeasance had not
occurred. In the case of legal defeasance, the Opinion of Counsel must be
accompanied by a ruling of the Internal Revenue Service issued to the Company,
or based on a change in law or regulation occurring after the date of the
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Indenture. Eligible Obligations include direct obligations of, or obligations
unconditionally guaranteed by, the United States of America entitled to the
benefit of the full faith and credit thereof and certificates, depositary
receipts or other instruments which evidence a direct ownership interest in
such obligations or in any specific interest or principal payments due in
respect thereof.
GOVERNING LAW. The Indenture and the New Debt Securities will be governed by
and construed in accordance with the law of the State of New York. (Sec. 112.)
CONCERNING THE TRUSTEE. The Trustee under the Indenture is the Mortgage
Trustee under the Mortgage and the trustee under a trust agreement
establishing a pension trust for the payment of retirement income for
employees of the Company. The Trustee also serves as trustee for the Company's
Savings Investment Plan and nuclear decommissioning trust. John Peters
MacCarthy and Janet McAfee Weakley, directors of the Company, are also
directors of the Trustee.
GLOBAL SECURITIES
Some or all of the New Bonds or New Debt Securities of any series may be
represented, in whole or in part, by one or more global securities (each, a
"Global Security") which will have an aggregate principal amount equal to that
of the New Bonds or New Debt Securities represented thereby. Each Global
Security will be registered in the name of a depositary (the "Depositary") or
a nominee thereof identified in the applicable Prospectus Supplement, will be
deposited with such Depositary or nominee or a custodian therefor and will
bear a legend regarding the restrictions on exchanges and registration of
transfer thereof referred to below and any such other matters as may be
provided for pursuant to the Mortgage or the Indenture.
As long as the Depositary, or its nominee, is the registered holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and holder of such Global Security and the
Securities represented thereby for all purposes under the Securities and the
Mortgage or the Indenture as the case may be. Except in limited circumstances,
owners of beneficial interests in a Global Security will not be entitled to
have such Global Security or any Securities represented thereby registered in
their names, will not receive or be entitled to receive physical delivery of
certificated Securities in exchange therefor and will not be considered to be
the owners or holders of such Global Security or any Securities represented
thereby for any purpose under the Securities or the Mortgage or the Indenture
as the case may be. All payments of principal of and any premium and interest
on a Global Security will be made to the Depositary or its nominee, as the
case may be, as the Holder thereof. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such
securities in definitive form. These laws may impair the ability to transfer
beneficial interests in a Global Security.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee
("participants") and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system,
the respective principal amounts of Securities represented by the Global
Security to the accounts of its participants. Ownership of beneficial
interests in a Global Security will be shown only on, and the transfer of
those ownership interests will be effected only through, records maintained by
the Depositary (with respect to participants' interests) or any such
participant (with respect to interests of persons held by such participants on
their behalf). Payments, transfers, exchanges, and others matters relating to
beneficial interests in a Global Security may be subject to various policies
and procedures adopted by the Depositary from time to time. None of the
Company, the Mortgage Trustee under the Mortgage, the Trustee under the
Indenture, or any agents of each of the foregoing, will have any
responsibility or liability for any aspect of the Depositary's or any
participant's records relating to, or for payments made on account of,
beneficial interests in a Global Security, or for maintaining, supervising, or
reviewing any records relating to such beneficial interests.
14
<PAGE>
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Form 10-K Annual Report, have been so incorporated in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The statements as to matters of law and legal conclusions included in the
Company's Form 10-K Annual Report and the Form 10-Q Reports incorporated by
reference in this Prospectus, and such statements included in this Prospectus
under "Description of the New Bonds" have been prepared under the supervision
of, and reviewed by, William E. Jaudes, Vice President and General Counsel of
the Company and such statements are made and incorporated or included herein
in reliance on the authority of Mr. Jaudes as an expert. Mr. Jaudes is a full-
time employee of the Company, and at September 30, 1996, owned 5,420 shares of
the Company's Common Stock.
LEGAL OPINIONS
The legality of the Securities will be passed upon for the Company by
William E. Jaudes, Vice President and General Counsel of the Company. Certain
legal matters will be passed upon for any underwriters, dealers or agents by
Winthrop, Stimson, Putnam & Roberts, New York, New York.
PLAN OF DISTRIBUTION
The Company may sell the Securities in any of three ways: (i) through
underwriters or dealers, (ii) directly to a limited number of purchasers or to
a single purchaser or (iii) through agents. The Prospectus Supplement with
respect to the Offered Securities will set forth the terms of the offering of
a particular series of the Offered Securities, including the name or names of
any underwriters, the purchase price of such Offered Securities and the net
proceeds to the Company from such sale, any underwriting discounts and other
items constituting underwriters' compensation, any initial public offering
price of the Offered Securities, any discounts or concessions allowed or
reallowed or paid to dealers, and the extent, if any, to which underwriters
intend to make a market in the Offered Securities. Any initial public offering
price and any discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
If underwriters are used in the sale, the Securities will be acquired by the
underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of the sale. The
Securities may be offered to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more
underwriting firms. The underwriter or underwriters with respect to a
particular underwritten offering of Offered Securities will be named in the
Prospectus Supplement relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth
on the cover page of such Prospectus Supplement. Unless otherwise set forth in
a Prospectus Supplement, the obligations of the underwriters to purchase the
Offered Securities will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all such Offered Securities if any
are purchased.
If Securities are sold through agents designated by the Company, the
applicable Prospectus Supplement will set forth the name of any agent involved
in the offer or sale of the Offered Securities and any commissions payable by
the Company 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.
If so indicated in the Prospectus Supplement, the Company will authorize
underwriters or dealers to solicit offers by certain specified institutions to
purchase Securities from the Company at the public offering price set forth in
the Prospectus Supplement pursuant to delayed delivery contracts providing for
payment and delivery
15
<PAGE>
on a specified date in the future. Such contracts will be subject to those
conditions set forth in the Prospectus Supplement, and the Prospectus
Supplement will set forth the commission payable for solicitation of such
contracts.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act of 1933, as
amended.
16
<PAGE>
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No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained in the
Prospectus or this Prospectus Supplement in connection with the offer made by
the Prospectus and this Prospectus Supplement and, if given or made, such
information or representations must not be relied upon as having been
authorized by the Company or the Underwriter. The Prospectus and this
Prospectus Supplement do not constitute an offer or solicitation by anyone in
any jurisdiction in which such offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so or
to anyone to whom it is unlawful to make such offer or solicitation. Neither
the delivery of the Prospectus or this Prospectus Supplement nor any sale made
hereunder shall under any circumstances create an implication that there has
been no change in the affairs of the Company since the date hereof.
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TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Selected Information....................................................... S-2
Risk Factors............................................................... S-4
Use of Proceeds............................................................ S-4
Recent Merger Developments................................................. S-5
Certain Terms of the Debentures............................................ S-6
United States Taxation..................................................... S-9
Underwriting............................................................... S-10
Legal Matters.............................................................. S-11
Prospectus
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 3
Ratio of Earnings to Fixed Charges......................................... 3
Description of New Bonds................................................... 3
Description of New Debt Securities......................................... 7
Global Securities.......................................................... 14
Experts.................................................................... 15
Legal Opinions............................................................. 15
Plan of Distribution....................................................... 15
</TABLE>
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$65,500,000
UNION ELECTRIC COMPANY
SERIES A SKIS/(SM)/
7.69% SUBORDINATED
CAPITAL INCOME SECURITIES
(SERIES A SUBORDINATED
DEFERRABLE INTEREST DEBENTURES)
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PROSPECTUS SUPPLEMENT
DECEMBER 10, 1996
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LEHMAN BROTHERS
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