<PAGE>
Prospectus Supplement
(To Prospectus dated April 27, 1998)
THE UNION LIGHT, HEAT AND POWER COMPANY
$20,000,000
6.50% DEBENTURES DUE 2008
The 6.50% Debentures Due 2008 (the "Offered Debentures") will mature on April
30, 2008. Interest on the Offered Debentures is payable semiannually on April 30
and October 30 commencing October 30, 1998. The Offered Debentures will be
represented by a global debenture registered in the name of a nominee of The
Depository Trust Company, New York, New York, as Depositary (the "Depositary"),
and will be available for purchase in denominations of $1,000 and any integral
multiple thereof. Beneficial interests in the Offered Debentures will be shown
on, and transfers thereof will be effected through, records maintained by the
Depositary and its participants. Except as described in the accompanying
Prospectus, Offered Debentures in certificated form will not be issued in
exchange for the global debenture. See "Certain Terms of the Offered Debentures"
herein.
----------------------------------------------------
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.
----------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
<S> <C> <C> <C>
Per Debenture 99.153% .401% 98.752%
Total $19,830,600 $80,200 $19,750,400
</TABLE>
(1) Plus accrued interest, if any, from April 30, 1998.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting" herein.
(3) Before deduction of expenses payable by the Company, estimated at $80,000.
----------------------------------------------------
The Offered Debentures are offered, subject to prior sale, when, as and if
issued by the Company and accepted by the Underwriter, and subject to approval
of certain legal matters by Davis Polk & Wardwell, counsel for the Underwriter
and certain other conditions. It is expected that delivery of the Offered
Debentures will be made on or about April 30, 1998 through the book-entry
facilities of The Depository Trust Company against payment therefor in
immediately available funds.
CHASE SECURITIES INC.
The date of this Prospectus Supplement is April 27, 1998.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE OFFERED
DEBENTURES, INCLUDING OVERALLOTMENT, STABILIZING TRANSACTIONS AND SHORT COVERING
TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
SUMMARY INFORMATION
THE FOLLOWING MATERIAL IS QUALIFIED IN ITS ENTIRETY BY THE INFORMATION AND
FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS AND IN THE DOCUMENTS
AND INFORMATION INCORPORATED HEREIN BY REFERENCE.
THE COMPANY
<TABLE>
<S> <C>
Company........................... The Union Light, Heat and Power Company ("Union Light"
or the "Company") is a wholly-owned subsidiary of The
Cincinnati Gas & Electric Company and an affiliate of
Cinergy Corp., a registered holding company under the
Public Utility Holding Company Act of 1935.
Business.......................... Electric and gas utility serving approximately 118,000
electric customers and approximately 78,000 gas
customers.
Service Area...................... 500 square miles in northern Kentucky having an
estimated population of 319,000.
</TABLE>
SELECTED INCOME INFORMATION
<TABLE>
<CAPTION>
12 MONTHS ENDED DECEMBER 31,
---------------------------------------------------------------
1997 1996 1995 1994 1993
---------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
(THOUSANDS, EXCEPT RATIOS)
Operating Revenues........................... $ 271,622 $ 267,768 $ 257,468 $ 249,535 $ 251,456
Operating Income............................. $ 18,435 $ 21,034 $ 19,830 $ 16,390 $ 17,936
Interest Charges--Net........................ $ 4,768 $ 4,661 $ 7,691 $ 8,373 $ 8,360
Net Income................................... $ 12,917 $ 14,596 $ 12,172 $ 8,387 $ 9,339
Ratio of Earnings to Fixed Charges........... 5.09 4.98 3.05 2.31 2.46
</TABLE>
CAPITALIZATION
<TABLE>
<CAPTION>
OUTSTANDING DECEMBER 31, 1997
-----------------------------
% OF
CAPITALIZATION
AMOUNT ---------------
------------
(THOUSANDS)
<S> <C> <C>
Total debt................................................................. $ 68,158 35.7%
Common stock equity........................................................ 122,913 64.3
------------ -----
Total capitalization................................................... $ 191,071 100.0%
------------ -----
------------ -----
</TABLE>
S-2
<PAGE>
USE OF PROCEEDS
The net proceeds after underwriting discounts and commissions and estimated
expenses from the sale of the Offered Debentures are expected to be $19,670,400.
The Company will use the proceeds to repay short-term indebtedness (estimated to
be approximately $34 million at the time the proceeds are received) incurred in
connection with the redemption on April 24, 1998 of $10 million principal amount
of its First Mortgage Bonds, 8% Series due October 1, 2003 and with its
contruction program.
CERTAIN TERMS OF THE OFFERED DEBENTURES
The following description of the particular terms of the Offered Debentures
supplements the description of the general terms and provisions of the Offered
Debentures set forth in the accompanying Prospectus under the caption
"Description of Debt Securities".
PRINCIPAL AMOUNT, INTEREST AND MATURITY
The Offered Debentures will be issued under the Indenture dated as of July
1, 1995 between Union Light and The Fifth Third Bank, Trustee, as supplemented
by a Second Supplemental Indenture dated as of April 30, 1998.
The Offered Debentures will be designated as specified on the cover of this
Prospectus Supplement and will be limited to a total of $20,000,000 aggregate
principal amount.
The Offered Debentures will mature on April 30, 2008, and will bear interest
at the rate per annum specified in their title, computed on the basis of a
360-day year of twelve 30-day months from April 30, 1998 or from the most recent
interest payment date to which interest has been paid or provided for, payable
semi-annually on April 30 and October 30 in each year, beginning October 30,
1998, to registered holders of record on the Business Day immediately preceding
such interest payment date. A "Business Day" shall mean any day other than a day
on which banking institutions in the City of New York are authorized or
obligated to close.
Principal of and interest on the Offered Debentures will initially be
payable and the Offered Debentures will be transferable at the corporate trust
office of the Trustee in the City of Cincinnati, located at 38 Fountain Square
Plaza, Cincinnati, Ohio 45263, provided that payment of interest may be made at
the option of the Company by checks mailed to the registered holders of the
Offered Debentures.
The Offered Debentures will not be secured and will rank equally with any
other indebtedness which is issued under the Indenture and not specifically
subordinated to the Offered Debentures.
REDEMPTION
Subject to the terms of the Indenture, the Company shall have the right to
redeem the Offered Debentures, in whole but not in part, from time to time and
at any time (such redemption, an "Optional Redemption", and the date thereof,
the "Optional Redemption Date") upon not less than 30 days' notice to the
holders, at a redemption price equal to the sum of (A) the greater of (i) 100%
of the principal amount of the Offered Debentures to be redeemed or (ii) the sum
of the present values of the Remaining Scheduled Payments thereon discounted to
the Optional Redemption Date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate plus 15 basis points,
less the Applicable Accrued Interest Amount plus (B) the Applicable Accrued
Interest Amount.
"Applicable Accrued Interest Amount" means, at the Optional Redemption Date,
the amount of interest accrued and unpaid from the prior interest payment date
to the Optional Redemption Date on the Offered Debentures subject to the
Optional Redemption determined at the rate per annum shown in the title thereof,
computed on the basis of a 360-day year of twelve 30-day months.
S-3
<PAGE>
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Offered Debentures to be redeemed pursuant
to the Optional Redemption. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Trustee after consultation with the
Company.
"Comparable Treasury Price" means, with respect to the Optional Redemption
Date, the average of the Reference Treasury Dealer Quotations for such Optional
Redemption Date.
"Reference Treasury Dealer" means a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"). "Reference Treasury
Dealer Quotations" means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m. on the third Business Day preceding such redemption
date.
"Remaining Scheduled Payments" means, with respect to any Offered Debenture,
the remaining scheduled payments of the principal thereof to be redeemed and
interest thereon that would be due after the Optional Redemption Date but for
the Optional Redemption.
"Treasury Rate" means, with respect to the Optional Redemption Date (if
any), the rate per annum equal to the semiannual equivalent yield to maturity of
the Comparable Treasury Issue, assuming a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such Optional Redemption Date.
The Offered Debentures will not be redeemable at the option of any holder
prior to maturity and will not be subject to any sinking fund.
GLOBAL SECURITIES
The Offered Debentures will be represented by a Global Debenture or
Debentures that will be deposited with, or on behalf of, The Depository Trust
Company, New York, New York, as Depositary (the "Depositary"), and will be
available for purchase in denominations of $1,000 or any integral multiple
thereof.
The Depositary has advised the Company and the Underwriter as follows: the
Depositary 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. The Depositary was created to hold securities of its participating
organizations (the "Participants") and to facilitate the clearance and
settlement of securities transactions, such as transfers and pledges, among its
Participants in such securities through electronic computerized book-entry
changes in accounts of the Participants, thereby eliminating the need for
physical movement of securities certificates. Participants include securities
brokers and dealers (including the Underwriter), banks, trust companies,
clearing corporations and certain other organizations, some of whom (and/or
their representatives) own the Depositary. Access to the Depositary's book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Persons who are not Participants may
beneficially own securities held by the Depositary only through Participants.
A further description of the Depositary's procedures with respect to the
Offered Debentures is set forth under "Description of Debt Securities--Global
Debt Securities" in the accompanying Prospectus.
S-4
<PAGE>
DEFEASANCE
The Offered Debentures will be subject to defeasance and covenant defeasance
as provided under the caption "Description of Debt Securities--Defeasance and
Covenant Defeasance" in the accompanying Prospectus.
UNDERWRITING
Under the terms of and subject to the conditions contained in an
Underwriting Agreement dated April 27, 1998, Chase Securities Inc. (the
"Underwriter") has agreed to purchase, and the Company has agreed to sell to the
Underwriter, $20,000,000 principal amount of the Offered Debentures.
The Underwriting Agreement provides that the obligation of the Underwriter
to pay for and accept delivery of the Offered Debentures is subject to the
approval of certain legal matters by counsel and to certain other conditions.
The Underwriter is committed to take and pay for all of the Offered Debentures
if any are taken.
The Underwriter proposes to offer part of the Offered Debentures directly to
the public at the public offering price set forth on the cover page hereof and
part to dealers at a price which represents a concession of .25% of the
principal amount under the public offering price, and the Underwriter may allow,
and such dealers may reallow, a concession not in excess of .20% of the
principal amount to certain other dealers. After the initial offering of the
Offered Debentures, the offering price and other selling terms may, from time to
time, be varied by the Underwriter.
The Company does not intend to apply for listing of the Offered Debentures
on a national securities exchange, but has been advised by the Underwriter that
it presently intends to make a market in the Offered Debentures as permitted by
applicable laws and regulations. The Underwriter is not obligated, however, to
make a market in the Offered Debentures and any such market-making may be
discontinued at any time by the Underwriter at its sole discretion. Accordingly,
no assurance can be given as to the liquidity of, or trading market for, the
Offered Debentures.
In connection with the offering of the Offered Debentures, the Underwriter
may engage in overallotment, stabilizing transactions and short covering
transactions. Overallotment involves sales in excess of the offering size, which
creates a short position for the Underwriter. Stabilizing transactions involve
bids to purchase the Offered Debentures in the open market for the purpose of
pegging, fixing or maintaining the price of the Offered Debentures. Short
covering transactions involve purchases of the Offered Debentures in the open
market after the distribution has been completed in order to cover short
positions. Such stabilizing transactions and short covering transactions may
cause the price of the Offered Debentures to be higher than it would otherwise
be in the absence of such transactions. Such activities, if commenced, may be
discontinued at any time.
An affiliate of the Underwriter engages in various general financing and
banking transactions with affiliates of the Company in the ordinary course of
business.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
S-5
<PAGE>
PROSPECTUS
THE UNION LIGHT, HEAT AND POWER COMPANY
DEBT SECURITIES
-----------------
THE UNION LIGHT, HEAT AND POWER COMPANY ("UNION LIGHT" OR THE "COMPANY")
INTENDS FROM TIME TO TIME TO ISSUE UP TO $55,000,000 AGGREGATE PRINCIPAL
AMOUNT OF UNSECURED DEBT SECURITIES (THE "DEBT SECURITIES") IN ONE OR MORE
SERIES ON TERMS TO BE DETERMINED AT THE TIME OR TIMES OF SALE. FOR EACH
ISSUE OF THE DEBT SECURITIES FOR WHICH THIS PROSPECTUS IS BEING
DELIVERED (THE "OFFERED SECURITIES") THERE WILL BE AN ACCOMPANYING
PROSPECTUS SUPPLEMENT (THE "PROSPECTUS SUPPLEMENT") THAT SETS
FORTH, WITHOUT LIMITATION AND TO THE EXTENT APPLICABLE, THE
SPECIFIC DESIGNATION, AGGREGATE PRINCIPAL AMOUNT,
DENOMINATION, MATURITY, PREMIUM, IF ANY, RATE OF INTEREST
(WHICH MAY BE FIXED OR VARIABLE) OR METHOD OF
CALCULATION THEREOF, TIME OF PAYMENT OF INTEREST,
ANY TERMS FOR REDEMPTION, ANY SINKING FUND
PROVISIONS, ANY SUBORDINATION PROVISIONS, THE
INITIAL PUBLIC OFFERING PRICE, THE NAMES OF
ANY UNDERWRITERS OR AGENTS, THE PRINCIPAL
AMOUNTS, IF ANY, TO BE PURCHASED BY THE
UNDERWRITERS, THE COMPENSATION OF
SUCH UNDERWRITERS OR AGENTS, AND
ANY OTHER SPECIAL TERMS OF THE
OFFERED SECURITIES.
-------------------
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.
-------------------
UNION LIGHT MAY SELL THE DEBT SECURITIES THROUGH UNDERWRITERS, DEALERS OR
AGENTS, OR DIRECTLY TO ONE OR A LIMITED NUMBER OF PURCHASERS. THE PROSPECTUS
SUPPLEMENT WILL SET FORTH THE NAMES OF UNDERWRITERS, DEALERS OR AGENTS, IF ANY,
ANY APPLICABLE COMMISSIONS OR DISCOUNTS AND THE NET PROCEEDS TO UNION LIGHT FROM
THE SALE OF THE OFFERED SECURITIES.
APRIL 27, 1998
<PAGE>
AVAILABLE INFORMATION
UNION LIGHT IS SUBJECT TO THE INFORMATIONAL REQUIREMENTS OF THE SECURITIES
EXCHANGE ACT OF 1934 (THE "EXCHANGE ACT") AND ACCORDINGLY FILES REPORTS AND
OTHER INFORMATION WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION"). INFORMATION CONCERNING DIRECTORS AND OFFICERS, THEIR
REMUNERATION, AND ANY MATERIAL INTEREST OF SUCH PERSONS IN TRANSACTIONS WITH
UNION LIGHT, AS OF PARTICULAR DATES, IS DISCLOSED IN UNION LIGHT'S ANNUAL REPORT
ON FORM 10-K FILED WITH THE COMMISSION. SUCH REPORTS AND OTHER INFORMATION CAN
BE INSPECTED AND COPIED AT THE PUBLIC REFERENCE FACILITIES MAINTAINED BY THE
COMMISSION AT ROOM 1024, 450 FIFTH STREET, N.W., WASHINGTON, D.C.; SUITE 1400,
500 WEST MADISON STREET, CHICAGO, ILLINOIS; AND SUITE 1300, SEVEN WORLD TRADE
CENTER, NEW YORK, N.Y. COPIES OF SUCH MATERIAL CAN ALSO BE OBTAINED FROM THE
PUBLIC REFERENCE SECTION OF THE COMMISSION AT ITS PRINCIPAL OFFICE AT 450 FIFTH
STREET, N.W., WASHINGTON, D.C. 20549 AT PRESCRIBED RATES, OR FROM THE
COMMISSION'S INTERNET WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, SUCH MATERIAL
CAN ALSO BE INSPECTED AT THE OFFICES OF THE NEW YORK STOCK EXCHANGE AND THE
CINCINNATI STOCK EXCHANGE.
UNION LIGHT'S PRINCIPAL EXECUTIVE AND BUSINESS OFFICE IS LOCATED AT 139 EAST
FOURTH STREET, CINCINNATI, OHIO 45202 (TELEPHONE 513-421-9500).
-------------------
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY UNION LIGHT OR ANY UNDERWRITER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION IN SUCH STATE. THE DELIVERY OF THIS PROSPECTUS
AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
-------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There is hereby incorporated in this Prospectus by reference the following
documents heretofore filed with the Securities and Exchange Commission:
1. Union Light's Annual Report on Form 10-K for the year ended December
31, 1997 filed pursuant to the Exchange Act.
All documents filed by Union Light pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated in this
Prospectus by reference and to be a part hereof from the date of filing of such
documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which is deemed to be incorporated
by reference herein or in the Prospectus Supplement 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.
UNION LIGHT HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON TO
WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, ON THE WRITTEN OR ORAL
REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO
ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED IN THIS PROSPECTUS BY REFERENCE,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS. REQUESTS FOR SUCH COPIES SHOULD BE
DIRECTED TO MR. WILLIAM L. SHEAFER, VICE PRESIDENT AND TREASURER, THE UNION
LIGHT, HEAT AND POWER COMPANY, 139 EAST FOURTH STREET, CINCINNATI, OHIO 45202
(TELEPHONE 513-421-9500).
2
<PAGE>
THE COMPANY
Union Light (incorporated in Kentucky in 1901) is a wholly-owned subsidiary
of The Cincinnati Gas & Electric Company ("CG&E") and an affiliate of Cinergy
Corp. ("Cinergy"), a registered holding company under the Public Utility Holding
Company Act of 1935. Union Light is primarily engaged in the transmission,
distribution, and sale of electric energy and the sale and transportation of
natural gas in northern Kentucky. The area served with electricity, gas, or both
covers approximately 500 square miles, has an estimated population of 319,000,
and includes the cities of Covington and Newport in Kentucky.
USE OF PROCEEDS
Except as otherwise described in the Prospectus Supplement, the net proceeds
of the Offered Securities will be applied primarily to the redemption,
repurchase, repayment, or retirement of outstanding indebtedness.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the years ended December
31, 1993 through 1997 were 2.46, 2.31, 3.05, 4.98 and 5.09, respectively.
DESCRIPTION OF DEBT SECURITIES
GENERAL
The Debt Securities may be issued in one or more new series under an
Indenture between the Company and The Fifth Third Bank, as Trustee (the
"Trustee"). 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 Indenture and the Debt Securities, the forms of which are
filed as exhibits to the registration statement of which this Prospectus forms a
part. Whenever particular provisions or defined terms in such documents are
referred to herein or in a Prospectus Supplement, such provisions or terms are
incorporated by reference herein or therein, as the case may be.
The Debt Securities will be unsecured obligations of the Company.
Reference is made to the Prospectus Supplement relating to any particular
issue of Offered Securities for the following terms, among others: (1) the title
of such Debt Securities; (2) any limit on the aggregate principal amount of such
Debt Securities or the series of which they are a part; (3) the date or dates on
which the principal of any of such Debt Securities will be payable; (4) the rate
or rates at which any of such 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 right, if any,
to extend interest payment periods and the duration of such extension; (6) the
place or places where the principal of and any premium and interest on any of
such Debt Securities will be payable; (7) the period or periods within which,
the price or prices at which and the terms and conditions on which any of such
Debt Securities may be redeemed, in whole or in part, at the option of the
Company; (8) the obligation, if any, of the Company to redeem or purchase any of
such Debt Securities pursuant to any sinking fund or analogous provision or at
the option of the Holder thereof, and the period or periods within which, the
price or prices at which and the terms and conditions on which any of such Debt
Securities will be redeemed or purchased, in whole or in part, pursuant to any
such obligation; (9) the denominations in which any of such Debt Securities will
be issuable; (10) if the amount of principal of or any premium or interest on
any of such Debt Securities may be determined with reference to an index or
pursuant to a formula, the manner in which such amounts will be determined; (11)
if applicable, that such Debt Securities, in whole or any specified part, are
defeasible pursuant to the provisions of the Indenture described under
"Defeasance and Covenant Defeasance"; (12) whether any of such Debt Securities
will be issuable in whole or in part in the form of one or more Global Debt
Securities and, if so, the
3
<PAGE>
respective Depositaries for such Global Debt Securities, the form of any legend
or legends to be borne by any such Global Debt Security in addition to or in
lieu of the legend referred to under "Form, Exchange and Transfer--Global Debt
Securities" and, if different from those described under such caption, any
circumstances under which any such Global Debt Security may be exchanged in
whole or in part for Debt Securities registered, and any transfer of such Global
Debt Security in whole or in part may be registered, in the names of Persons
other than the Depositary for such Global Debt Security or its nominee; (13) any
addition to or change in the Events of Default applicable to any of such Debt
Securities and any change in the right of the Trustee or the Holders to declare
the principal amount of any of such Debt Securities due and payable; (14) any
addition to or change in the covenants in the Indenture; (15) the applicability
of or any change in the subordination provisions of the Indenture for a series
of Debt Securities; and (16) any other terms of such Debt Securities not
inconsistent with the provisions of the Indenture. (Section 301).
Except as otherwise described in the Prospectus Supplement, the covenants
contained in the Indenture would not afford holders of Debt Securities
protection in the event of a highly-leveraged transaction involving the Company.
FORM, EXCHANGE, AND TRANSFER
The Debt Securities of each series will be issuable only in fully registered
form without coupons. (Section 302).
At the option of the Holder, subject to the terms of the Indenture and the
limitations applicable to Global Debt Securities, Debt Securities of any series
will be exchangeable for other Debt Securities of the same series, of any
authorized denomination and of like tenor and aggregate principal amount.
(Section 305).
Subject to the terms of the Indenture and the limitations applicable to
Global Debt Securities, Debt Securities may be presented for exchange as
provided above or for registration of transfer (duly endorsed or with the form
of transfer endorsed thereon duly executed) at the office of the Security
Registrar or at the office of any transfer agent designated by the Company for
such purpose. No service charge will be made for any registration of transfer or
exchange of 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 agent, as the case may be, being satisfied with the
documents of title and identity of the person making the request. The Company
has appointed the Trustee as Security Registrar. Any transfer agent (in addition
to the Security Registrar) initially designated by the Company for any Debt
Securities will be named in the applicable Prospectus Supplement. (Section 305).
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 Debt Securities of
each series. (Section 1002).
If the Debt Securities of any series (or of any series and specified tenor)
are to be redeemed in part, the Company will not be required to (i) issue,
register the transfer of, or exchange any Debt Security of that series (or of
that series and specified tenor, as the case may be) 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 that may be selected 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. (Section 305).
GLOBAL DEBT SECURITIES
Some or all of the Debt Securities of any series may be issued as Global
Debt Securities. Each Global Debt Security will be registered in the name of a
Depositary or a nominee thereof identified in the applicable
4
<PAGE>
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 Indenture.
Notwithstanding any provision of the Indenture or any Debt Security
described herein, no Global Debt Security may be exchanged in whole or in part
for Debt Securities registered, and no transfer of a Global Debt Security in
whole or in part may be registered, in the name of any Person other than the
Depositary for such Global Debt Security or any nominee of such Depositary
unless (i) the Depositary has notified the Company that it is unwilling or
unable to continue as Depositary for such Global Debt Security or has ceased to
be qualified to act as such as required by the Indenture, (ii) there shall have
occurred and be continuing an Event of Default with respect to such Global Debt
Security or (iii) there shall exist such circumstances, if any, in addition to
or in lieu of those described above as may be described in the applicable
Prospectus Supplement. All securities issued in exchange for a Global Debt
Security or any portion thereof will be registered in such names as the
Depositary may direct. (Sections 204 and 305).
As long as the Depositary, or its nominee, is the registered Holder of a
Global Debt Security, the Depositary or such nominee, as the case may be, will
be considered the sole owner and Holder of such Global Debt Security for all
purposes under the Debt Securities and the Indenture. Except in the limited
circumstances referred to above, owners of beneficial interests in a Global Debt
Security will not be entitled to have such Global Debt Security or any portion
thereof registered in their names, will not receive or be entitled to receive
physical delivery of certificated Debt Securities in exchange therefor and will
not be considered to be the owners or Holders of such Global Debt Security or
any portion thereof for any purpose under the Debt Securities or the Indenture.
All payments of principal of and any premium and interest on a Global Debt
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 Debt Security.
Ownership of beneficial interests in a Global Debt Security will be limited
to institutions that have accounts with the Depositary or its nominee (the
"Participants") and to persons that may hold beneficial interests through
Participants. In connection with the issuance of any Global Debt Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective portion of the principal amounts of the Global Debt Security to the
accounts of its Participants. Ownership of beneficial interests in a Global Debt
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 other matters relating to beneficial interests in a
Global Debt Security are subject to various policies and procedures adopted by
the Depositary from time to time. None of the Company, the Trustee or any agent
of the Company or the Trustee 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 Debt Security, or
for maintaining, supervising, or reviewing any records relating to such
beneficial interests.
Secondary trading in notes and debentures of corporate issuers is generally
settled in clearing-house or next-day funds. In contrast, beneficial interests
in a Global Debt Security, in some cases, will trade in the Depositary's
same-day funds settlement system in which secondary market trading activity in
those beneficial interests are required by the Depositary to settle in
immediately available funds. There is no assurance as to the effect, if any,
that settlement in immediately available funds would have on trading activity in
such beneficial interests. Also, settlement for purchases of beneficial
interests in a Global Debt Security upon the original issuance thereof may be
required to be made in immediately available funds.
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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 Debt
Securities) is registered at the close of business on the Regular Record Date
for such interest. (Section 307).
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the 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, except that at the
option of the Company payment of any interest may be made by check mailed to the
address of the Person entitled thereto as such address appears in the Security
Register. Unless otherwise indicated in the applicable Prospectus Supplement,
the corporate trust office of the Trustee in the City of Cincinnati will be
designated as the Company's sole Paying Agent for payments with respect to Debt
Securities of each series. Any other Paying Agents initially designated by the
Company for the 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 Debt Securities of a particular series. (Section 1002).
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 18 months 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.
(Section 1003).
CONSOLIDATION, MERGER, AND SALE OF ASSETS
The Indenture does not contain any covenant that restricts the Company's
ability to merge or consolidate with or into any other corporation, sell or
convey all or substantially all of its assets to any person, firm or corporation
or otherwise engage in restructuring transactions, provided that the successor
corporation assumes due and punctual payment of principal or premium, if any,
and interest on the Debt Securities. (Section 801).
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
Indenture with respect to Debt Securities of any series: (a) failure to pay
principal of or any premium on any Debt Security of that series when due; (b)
failure to pay any interest on any Debt Securities of that series when due,
continued for 30 days; (c) failure to deposit any sinking fund payment, when
due, in respect of any Debt Security of that series; (d) failure to perform any
other covenant of the Company in the Indenture (other than a covenant included
in the Indenture solely for the benefit of a series other than that series),
continued for 90 days after written notice has been given by the Trustee, or the
Holders of at least 35% in principal amount of the Outstanding Debt Securities
of that series, as provided in the Indenture; and (e) certain events of
bankruptcy, insolvency or reorganization. (Section 501).
If an Event of Default (other than an Event of Default described in clause
(e) above) with respect to the Debt Securities of any series at the time
Outstanding shall occur and be continuing, either the Trustee or the Holders of
at least 35% in aggregate principal amount of the Outstanding Debt Securities of
that series by notice as provided in the Indenture may declare the principal
amount of the Debt Securities of that series to be due and payable immediately.
If an Event of Default described in clause (e) above with respect to the Debt
Securities of any series at the time Outstanding shall occur, the principal
amount of all the Debt Securities of that series will automatically, and without
any action by the Trustee or any Holder, become immediately due and payable.
After any such acceleration, but before a judgment or decree based on
acceleration, the Holders of a majority in aggregate principal amount of the
Outstanding Debt Securities of
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that series may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the non-payment of accelerated
principal, have been cured or waived as provided in the Indenture. (Section
502). For information as to waiver of defaults, see "Modification and Waiver."
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 reasonably satisfactory indemnity. (Section
603). Subject to such provisions for the indemnification of the Trustee, the
Holders of a majority in principal amount of the Outstanding 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. (Section 512).
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 Debt Securities of that series, (ii) the Holders
of at least 35% in aggregate principal amount of the Outstanding Debt Securities
of that series have made written request, and such Holder or Holders have
offered reasonably satisfactory 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. (Section 507). 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. (Section 508).
The Company will be required to furnish to the Trustee annually a statement
by certain of its officers as to whether or not the Company, to their knowledge,
is in default in the performance or observance of any of the terms, provisions
and conditions of the Indenture and, if so, specifying all such known defaults.
(Section 1004).
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company and
the Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Debt Securities of each series
affected by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of the Holder of each
Outstanding Debt Security affected thereby, (a) change the Stated Maturity of
the principal of, or any installment of principal of or interest on, any Debt
Security, (b) reduce the principal amount of, or any premium or interest on, any
Debt Security, (c) reduce the amount of principal of an Original Issue Discount
Security or any other Debt Security payable upon acceleration of the Maturity
thereof, (d) change the place or currency of payment of principal of, or any
premium or interest on, any Debt Security, (e) affect the applicability of the
subordination provisions to any Debt Security, (f) impair the right to institute
suit for the enforcement of any payment on or with respect to any Debt Security,
(g) reduce the percentage in principal amount of Outstanding Debt Securities of
any series, the consent of whose Holders is required for modification or
amendment of the Indenture, reduce the percentage in principal amount of
Outstanding Debt Securities of any series necessary for waiver of compliance
with certain provisions of the Indenture or for waiver of certain defaults or
modify such provisions with respect to modification and waiver. (Section 902).
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. (Section 1007). The
Holders of a majority in principal amount of the Outstanding Debt Securities
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of any series may waive any past default under the Indenture, except a default
in the payment of principal, premium, or interest and certain covenants and
provisions of the Indenture which cannot be amended without the consent of the
Holder of each Outstanding Debt Security of such series affected. (Section 513).
Except in certain limited circumstances, the Company will be entitled to set
any day as a record date for the purpose of determining the Holders of
Outstanding Debt Securities of any series entitled to give or take any
direction, notice, consent, waiver, or other action under the Indenture, in the
manner and subject to the limitations provided in the Indenture. In certain
limited circumstances, the Trustee will be entitled to set a record date for
action by Holders. If a record date is set for any action to be taken by Holders
of a particular series, such action may be taken only by persons who are Holders
of Outstanding Debt Securities of that series on the record date. To be
effective, such action must be taken by Holders of the requisite principal
amount of such Debt Securities within a specified period following the record
date. For any particular record date, this period will be 180 days or such other
shorter period as may be specified by the Company (or the Trustee, if it set the
record date), and may be shortened or lengthened (but not beyond 180 days) from
time to time. (Section 104).
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus Supplement, the
Company may elect, at its option at any time, to have the provisions of Section
1302, relating to defeasance and discharge of indebtedness, or Section 1303,
relating to defeasance of certain restrictive covenants in the Indenture,
applied to the Debt Securities or to the Debt Securities of any series. (Section
1301).
DEFEASANCE AND DISCHARGE. The Indenture provides that, upon the Company's
exercise of its option (if any) to have Section 1302 applied to any Debt
Securities, the Company will be discharged from all its obligations with respect
to such Debt Securities (except for certain obligations to exchange or register
the transfer of Debt Securities, to replace stolen, lost or mutilated Debt
Securities, to maintain paying agencies and to hold moneys for payment in trust)
upon the deposit in trust for the benefit of the Holders of such Debt Securities
of money or U.S. Government Obligations, or both, which, through the payment of
principal and interest in respect thereof in accordance with their terms, will
provide money in an amount sufficient to pay the principal of and any premium
and interest on such Debt Securities on the respective Stated Maturities in
accordance with the terms of the Indenture and such Debt Securities. Such
defeasance or discharge may occur only if, among other things, the Company has
delivered to the Trustee an Opinion of Counsel to the effect that the Company
has received from, or there has been published by, the United States Internal
Revenue Service a ruling, or there has been a change in tax law, in either case
to the effect that Holders of such Debt Securities will not recognize gain or
loss for federal income tax purposes as a result of such deposit, defeasance,
and discharge and will be subject to federal income tax on the same amount, in
the same manner and at the same times as would have been the case if such
deposit, defeasance and discharge were not to occur. (Sections 1302 and 1304).
DEFEASANCE OF CERTAIN COVENANTS. The Indenture provides that, upon the
Company's exercise of its option (if any) to have Section 1303 applied to any
Debt Securities, the Company may omit to comply with certain restrictive
covenants that may be described in the applicable Prospectus Supplement, and the
occurrence of certain Events of Default, which are described above in clause (d)
(with respect to such restrictive covenants) under "Events of Default" and any
that may be described in the applicable Prospectus Supplement, will be deemed
not to be or result in an Event of Default, in each case with respect to such
Debt Securities. The Company, in order to exercise such option, will be required
to deposit, in trust for the benefit of the Holders of such Debt Securities,
money or U.S. Government Obligations, or both, which, through the payment of
principal and interest in respect thereof in accordance with their terms, will
provide money in an amount sufficient to pay the principal of and any premium
and interest on such Debt Securities on the respective Stated Maturities in
accordance with the terms of the Indenture and such Debt Securities. The Company
will also be required, among other things, to deliver to the Trustee an Opinion
of Counsel to the effect that Holders of such Debt Securities will not recognize
gain or loss for federal income tax purposes as
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a result of such deposit and defeasance of certain obligations and will be
subject to federal income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit and defeasance were not
to occur. In the event the Company exercised this option with respect to any
Debt Securities and such Debt Securities were declared due and payable because
of the occurrence of any Event of Default, the amount of money and U.S.
Government Obligations so deposited in trust would be sufficient to pay amounts
due on such Debt Securities at the time of their respective Stated Maturities
but may not be sufficient to pay amounts due on such Debt Securities upon any
acceleration resulting from such Event of Default. In such case, the Company
would remain liable for such payments. (Sections 1303 and 1304).
TITLE
The Company, the Trustee, and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered as the absolute
owner thereof (whether or not such Debt Security may be overdue) for the purpose
of making payment and for all other purposes. (Section 308).
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the law of the State of New York. (Section 112).
CONCERNING THE TRUSTEE
The Fifth Third Bank is the Trustee under the Indenture. The Fifth Third
Bank also acts as the Trustee for certain unsecured debt securities of CG&E and
PSI Energy, Inc. ("PSI"), an affiliate of Union Light, is the Trustee for
certain pollution control revenue bonds of CG&E and PSI, acts as registrar for
preferred stock of CG&E and PSI and for the common stock of Cinergy, and is the
transfer agent for the capital stock of Union Light. The Fifth Third Bank makes
loans to, acts as depositary for, and, in the normal course of business, also
performs other services for Union Light, CG&E and PSI.
PLAN OF DISTRIBUTION
Union Light may sell the Debt 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 sets forth the terms of the offering of the
Offered Securities, including the name or names of any underwriters, dealers or
agents, the purchase price of such Offered Securities and the proceeds to Union
Light from such sale, any underwriting discounts and other items constituting
underwriters' compensation, any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
If underwriters are used in the sale, the Debt Securities will be acquired
by the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. The
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.
In connection with the sale of Offered Securities, the underwriters may receive
compensation from Union Light or from purchasers in the form of discounts,
concessions or commissions. The underwriters will be, and any dealers
participating in the distribution of the Offered Securities may be, deemed to be
underwriters within the meaning of the Securities Act of 1933. Union Light has
agreed to indemnify the underwriters against certain civil liabilities,
including liabilities under the Securities Act of 1933. The underwriting
agreement
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pursuant to which any Offered Securities are to be sold will provide that the
obligations of the underwriters are subject to certain conditions precedent and
that the underwriters will be obligated to purchase all of the Offered
Securities if any are purchased.
Offered Securities may be sold directly by Union Light or through agents
designated by Union Light from time to time. The Prospectus Supplement sets
forth the name of any agent involved in the offer or sale of the Offered
Securities in respect of which the Prospectus Supplement is delivered as well as
any commissions payable by Union Light 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, Union Light will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Offered Securities from Union Light at the public
offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery 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.
The balance sheets of Union Light as of December 31, 1997 and 1996 and the
related statements of income, changes in common stock equity and cash flows for
each of the three years in the period ended December 31, 1997, included in Union
Light's Annual Report on Form 10-K for the year ended December 31, 1997, have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are incorporated herein by
reference in reliance upon the authority of said firm as experts in accounting
and auditing in giving said report.
LEGAL OPINIONS
The legality of the Debt Securities will be passed upon for Union Light by
Taft, Stettinius & Hollister LLP, Star Bank Center, Cincinnati, Ohio 45202, and
for the Underwriters by Davis Polk & Wardwell, 450 Lexington Avenue, New York,
New York 10017, who may rely as to matters of Kentucky law on the opinion of
Taft, Stettinius & Hollister LLP.
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