<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER 19, 1997)
$100,000,000
THE UNITED ILLUMINATING COMPANY
6% NOTES DUE DECEMBER 15, 2003
---------------------
INTEREST PAYABLE ON JUNE 15 AND DECEMBER 15
------------------------
THE COMPANY MAY NOT REDEEM THE NOTES PRIOR TO MATURITY.
------------------------
PRICE 99.856% AND ACCRUED INTEREST, IF ANY
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
--------------- ------------- ---------------
<S> <C> <C> <C>
PER NOTE.................................................. 99.856% .600% 99.256%
TOTAL..................................................... $99,856,000 $600,000 $99,256,000
</TABLE>
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE UNDERWRITERS EXPECT TO DELIVER THE NOTES TO PURCHASERS ON DECEMBER 18, 1998.
------------------------
MORGAN STANLEY DEAN WITTER LEHMAN BROTHERS
DECEMBER 15, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PROSPECTUS
Page Page
---- ----
<S> <C> <C> <C>
Use of Proceeds. . . . . . . . . . . . . .S-2 Available Information. . . . . . . . . . . . . . . . .2
Summary Financial Information. . . . . . .S-3 Incorporation of Certain Documents by Reference. . . .2
Ratios of Earnings to Fixed Charges. . . .S-4 The Company. . . . . . . . . . . . . . . . . . . . . .4
Supplemental Description of Notes. . . . .S-4 Use of Proceeds. . . . . . . . . . . . . . . . . . . .5
Underwriters . . . . . . . . . . . . . . .S-7 Description of Debt Securities . . . . . . . . . . . .5
Legal Opinions . . . . . . . . . . . . . .S-8 Plan of Distribution . . . . . . . . . . . . . . . . 13
Experts. . . . . . . . . . . . . . . . . .S-8 Ratios of Earnings to Fixed Charges. . . . . . . . . 14
Legal Matters. . . . . . . . . . . . . . . . . . . . 14
Experts. . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
You should rely only on the information contained in this document or that
we have referenced you to. We have not authorized anyone to provide you with
information that is different. We are offering to sell these securities, and
seeking offers to buy these securities, only in jurisdictions where offers and
sales are permitted. The prospectus supplement is part of and must be read in
conjunction with the accompanying prospectus dated December 19, 1997. You
should not assume that the information contained in this prospectus supplement
and the accompanying prospectus is accurate as of any date other than the dates
on the front of these documents.
_________________
USE OF PROCEEDS
The Company will receive $99,256,000 aggregate proceeds from the sale of
the Notes, before deducting expenses payable by the Company estimated at
$200,000.
The net proceeds from the sale of the Notes will be temporarily invested.
On January 15, 1999, $66,202,000 will be applied to pay at maturity the
outstanding principal amount of our 6.20% 1993 Series H Notes and the remaining
net proceeds will be used for general corporate purposes.
S-2
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following material, which is presented to furnish limited financial
information regarding the Company, is qualified in its entirety by reference to
the detailed information and financial statements contained in the Incorporated
Documents (as defined in the accompanying Prospectus), which are available upon
request from the Company. (See "Available Information" in the accompanying
Prospectus.) Therefore, the following should be read together with the
Incorporated Documents.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, TWELVE MONTHS ENDED DECEMBER 31,
--------------- -----------------------------------------
1998 1997 1996 1995
----------- ----------- ----------- -----------
(UNAUDITED) (IN THOUSANDS)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating Revenues. . . . . . . . . . . $520,867 $710,267 $726,020 $690,449
Operating Income. . . . . . . . . . . . 81,313 104,573 109,135 127,156
Total Allowance for Funds Used During
Construction (1) . . . . . . . . . . 540 1,575 2,375 2,762
Total Interest Charges. . . . . . . . . 39,038 62,226 69,767 76,571
Net Income. . . . . . . . . . . . . . . 40,695 45,791 39,096 50,393
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
------------------------------------------------------------
ACTUAL AS ADJUSTED(2)
------------------------ ------------------------
PERCENT OF PERCENT OF
AMOUNT CAPITALI- AMOUNT CAPITALI-
(UNAUDITED) ZATION (UNAUDITED) ZATION
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Capitalization, including short-term debt:
Short-Term Debt . . . . . . . . . . . . . . . $ 113,195 9.0% $ 113,195 8.7%
Long-Term Debt (including current
maturities) . . . . . . . . . . . . . . . . 639,215 50.7 673,013 52.0
Preferred Stock . . . . . . . . . . . . . . . 4,299 0.3 4,299 0.3
Minority Interest In Preferred Securities . . 50,000 4.0 50,000 3.9
Common Stock Equity . . . . . . . . . . . . . 453,861 36.0 453,861 35.1
---------- ----- ---------- -----
Total Capitalization. . . . . . . . . . . . $1,260,570 100.0% $1,294,368 100.0%
========== ===== ========== =====
</TABLE>
_____________
(1) Allowance for Funds Used During Construction is a non-cash credit to income
that represents the approximate cost of debt and equity capital devoted to
plant under construction. For balance sheet purposes, Allowance for Funds
Used During Construction is capitalized to the Company's plant account and
depreciated and recovered over the life of the asset.
(2) Adjusted to give effect to the issuance of the Notes and the application of
$66,202,000 of the net proceeds thereof to redeem all of the Company's
6.20% 1993 Series H Notes. See "Use of Proceeds."
S-3
<PAGE>
RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED TWELVE MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, 1998 1997 1996 1995 1994 1993
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges (A)...... 2.42 2.08 2.03 2.25 1.99 1.69
</TABLE>
_____________
(A) "Earnings," as defined by Commission Regulation S-K, represent the
aggregate of (1) net income, (2) taxes based on income, (3) investment tax
credit adjustments - net and (4) fixed charges. "Fixed Charges," as
defined by Commission Regulations S-K, represent interest (whether expensed
or capitalized), related amortization and interest applicable to rentals
charged to operating expenses.
SUPPLEMENTAL DESCRIPTION OF NOTES
The following description of the terms of the Notes being offered (referred
to in the Prospectus as the "Debt Securities") supplements the description of
the general terms and provisions of the Debt Securities contained in the
Prospectus.
GENERAL
Interest on these Notes will accrue at the rate of 6% per annum and will be
payable semiannually on June 15 and December 15, beginning June 15, 1999, to the
holders of record at the close of business on the preceding June 1 and December
1, respectively.
The Notes will be limited to $100,000,000 aggregate principal amount and
will be issued only in denominations of $1,000 and integral multiples of $1,000.
The Notes will mature on December 15, 2003.
At December 15, 1998, there are $166,202,000 of notes issued and
outstanding under the Indenture.
REDEMPTION
The Notes are not redeemable prior to maturity and will not be entitled to
the benefits of any sinking fund.
THE DEPOSITORY TRUST COMPANY
The Depository Trust Company ("DTC") will act as securities depositary for
the Notes. The Notes will be issued as fully-registered Global Securities
registered in the name of Cede & Co. (DTC's partnership nominee).
DTC has advised us and the Underwriters that it 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 and 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.
S-4
<PAGE>
DTC holds securities that its participating organizations ("Participants")
deposit with DTC. DTC also facilitates the settlement among Participants of
securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations.
DTC is owned by a number of its Direct Participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, 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. The rules applicable to DTC and its
Participants are on file with the Securities and Exchange Commission.
BOOK-ENTRY NOTES
Purchases of Notes under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Notes on DTC's records. The
ownership interest of each actual purchaser of each Note ("Beneficial Owner") is
in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their
purchase. However, Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction.
Transfers of ownership interests in the Notes 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 Notes, except in the event that use of the book-entry system for
the Notes is discontinued.
To facilitate subsequent transfers, all Notes deposited by Participants
with DTC are registered in the name of DTC's partnership nominee, Cede & Co.
The deposit of Notes 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 Notes. DTC's records reflect only the identity of the
Direct Participants to whose accounts such Notes are credited, which may or may
not be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Notes within an issue are being redeemed, DTC's practice is to determine by lot
the amount of the interest of each Direct Participant in such issue to be
redeemed.
S-5
<PAGE>
Neither DTC nor Cede & Co. will consent or vote with respect to Notes.
Under its usual procedures, DTC mails 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
Notes are credited on the record date (identified in a listing attached to the
omnibus proxy).
Principal, premium, if any, and interest payments on the Notes 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, the
Trustee, or us, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal and interest to DTC is the
responsibility of the Company or the agent, disbursement of such payments to
Direct Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
DTC may discontinue providing its services as securities depositary with
respect to the Notes at any time by giving reasonable notice to us or the
Trustee. Under such circumstances, in the event that a successor securities
depositary is not obtained, Note certificates are required to be printed and
delivered.
We may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depositary). In that event, Note
certificates will be printed and delivered. In any such instance, a Beneficial
Owner will be entitled to have such certificated Notes registered in its name.
Individual certificated Notes so issued will be issued as registered Notes in
denominations of $1,000 and integral multiples of $1,000.
We have obtained the information in this section concerning DTC and DTC's
book-entry system from sources that we believe to be reliable, but we take no
responsibility for the accuracy of this information.
NEITHER WE, THE TRUSTEE, NOR THE UNDERWRITERS WILL HAVE ANY RESPONSIBILITY
OR OBLIGATION TO PARTICIPANTS, OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES,
WITH RESPECT TO THE ACCURACY OF DTC RECORDS, ITS NOMINEES OR ANY PARTICIPANT
WITH RESPECT THERETO.
S-6
<PAGE>
UNDERWRITERS
Under the terms and subject to the conditions contained in an underwriting
agreement dated the date of this prospectus supplement, the Underwriters listed
below have agreed to purchase, and we have agreed to sell to the Underwriters,
severally, the respective principal amounts of Notes set forth opposite their
names below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NAME NOTES
- ---- -------------------
<S> <C>
Morgan Stanley & Co. Incorporated .......................... $ 65,000,000
Lehman Brothers Inc. ....................................... 35,000,000
------------
Total ..................................... $100,000,000
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Notes are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are committed to take and pay for all of the Notes
if any are taken.
The Underwriters initially propose to offer all or part of the Notes
directly to the public at the public offering price set forth on the cover page
hereof and all or part to certain dealers at prices that represent concessions
not to exceed .35% of the principal amount of the Notes. The Underwriters may
allow, and such dealers may reallow, concessions to certain other dealers not to
exceed .25% of the principal amount of the Notes. After the initial offering of
the Notes, the offering price and other selling terms may from time to time be
varied by the Underwriters.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Notes, as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes and any such market making may be discontinued at any time at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or trading market for, the Notes.
In order to facilitate the offering of the Notes, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the Notes. Specifically, the Underwriters may overallot in connection with the
offering of the Notes, creating a short position in the Notes for their own
accounts. In addition, to cover overallotments or to stabilize the price of the
Notes, the Underwriters may bid for, and purchase, the Notes in the open market.
Finally, the underwriting syndicate may reclaim selling concessions allowed to
an Underwriter or a dealer for distributing the Notes in the offering if the
syndicate repurchases previously distributed Notes in transactions to cover
syndicate short positions, in stabilization transactions or otherwise. Any of
these activities may stabilize or maintain the market price of the Notes above
independent market levels. The Underwriters are not required to engage in these
activities, and may end any of these activities at any time.
We have agreed to indemnify the Underwriters against certain liabilities,
including certain liabilities under the Securities Act of 1933, as amended.
S-7
<PAGE>
LEGAL OPINIONS
The legality of the Notes will be passed upon for us by Wiggin & Dana, New
Haven, Connecticut, our counsel, and for the Underwriters by Winthrop, Stimson,
Putnam & Roberts, New York, New York, counsel for the Underwriters.
EXPERTS
The consolidated financial statements of The United Illuminating Company as
of December 31, 1997 and 1996 and for each of the three years in the period
ended December 31, 1997 incorporated in the accompanying prospectus by reference
to the Annual Report on Form 10-K of The United Illuminating Company for the
year ended December 31, 1997 have been so incorporated in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
S-8
<PAGE>
PROSPECTUS
$300,000,000
THE UNITED ILLUMINATING COMPANY
DEBT SECURITIES
_________________
THE UNITED ILLUMINATING COMPANY (THE "COMPANY" OR "UI") MAY ISSUE AND OFFER
FROM TIME TO TIME IN ONE OR MORE SERIES DEBT SECURITIES (THE "DEBT SECURITIES")
IN AN AGGREGATE PRINCIPAL AMOUNT OF NOT IN EXCESS OF $300,000,000. THE COMPANY
WILL OFFER DEBT SECURITIES TO THE PUBLIC ON TERMS DETERMINED BY MARKET
CONDITIONS AT THE TIME OF SALE. THE ACCOMPANYING SUPPLEMENT TO THIS PROSPECTUS
(THE "PROSPECTUS SUPPLEMENT") SETS FORTH THE SPECIFIC DESIGNATION, AGGREGATE
PRINCIPAL AMOUNT, MATURITY, INTEREST RATE, TIME OF PAYMENT OF ANY INTEREST,
ANY TERMS FOR OPTIONAL OR MANDATORY REDEMPTION OR ANY SINKING FUND PROVISIONS,
ANY INITIAL PUBLIC OFFERING PRICE, THE PROCEEDS TO THE COMPANY AND ANY OTHER
SPECIFIC TERMS IN CONNECTION WITH THE OFFERING AND SALE OF SUCH DEBT 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.
_________________
DEBT SECURITIES MAY BE OFFERED DIRECTLY OR THROUGH UNDERWRITERS, DEALERS OR
AGENTS DESIGNATED FROM TIME TO TIME (WHICH MAY INCLUDE MORGAN STANLEY & CO.
INCORPORATED AND LEHMAN BROTHERS INC.), AS SET FORTH IN THE PROSPECTUS
SUPPLEMENT. THE PROSPECTUS SUPPLEMENT SETS FORTH ANY APPLICABLE COMMISSIONS OR
DISCOUNTS AND THE PROCEEDS TO THE COMPANY FROM ANY SUCH OFFERING. SEE "PLAN OF
DISTRIBUTION" FOR POSSIBLE INDEMNIFICATION ARRANGEMENTS FOR UNDERWRITERS,
DEALERS AND AGENTS.
DECEMBER 19, 1997
<PAGE>
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus and any related Prospectus
Supplement and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or any underwriter,
dealer or agent. Neither the delivery of this Prospectus and any related
Prospectus Supplement nor any sale made hereunder shall under any circumstances
create any implication that there has been no change in the affairs of the
Company since the date hereof or thereof. This Prospectus and any related
Prospectus Supplement do not constitute an offer to sell or a solicitation of an
offer to buy securities 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 any person to whom it is unlawful
to make such offer or solicitation.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 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 and any material interest of such persons in
transactions with the Company is disclosed in proxy statements distributed to
shareholders of the Company and filed with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549; in the Commission's New York Regional
Office, 7 World Trade Center, 13th Floor, New York, New York 10048-1102; and
Chicago Regional Office, Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511; and copies of such material can be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
maintains an Internet web site that contains reports, proxy and information
statements and other information regarding reporting companies under the
Exchange Act. The address of such Internet web site is http:/www.sec.gov. Such
material can also be inspected and copied at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated in this Prospectus by reference the following
documents heretofore filed with the Commission, to which reference is hereby
made:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, filed pursuant to Section 13 of the 1934 Act (the "1996 Form
10-K")
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997 filed pursuant to Section
13 of the 1934 Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the 1934 Act after the date of this Prospectus and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents (such documents, and the documents enumerated
above, are hereinafter referred to as "Incorporated Documents"; provided,
however, that the documents enumerated above or subsequently filed by the
Company pursuant to Section 13 or 14 of the 1934 Act prior to the filing with
the Commission of the Company's Annual Report on Form 10-K for the current
fiscal year shall not be
2
<PAGE>
Incorporated Documents or be incorporated by reference in this Prospectus or be
a part hereof from and after such filing of such Annual Report on Form 10-K).
Any statement contained herein or in an Incorporated Document shall be
deemed to be modified or superseded, for all purposes, to the extent that a
statement contained herein, in any Prospectus Supplement or in any subsequently
filed Incorporated Document 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 INFORMATION RELATING TO THE COMPANY CONTAINED IN THIS PROSPECTUS AND
ANY ACCOMPANYING PROSPECTUS SUPPLEMENT DOES NOT PURPORT TO BE COMPREHENSIVE AND
IS BASED UPON INFORMATION CONTAINED IN THE INCORPORATED DOCUMENTS; ACCORDINGLY,
SUCH INFORMATION SHOULD BE READ TOGETHER WITH THE INFORMATION CONTAINED IN THE
INCORPORATED DOCUMENTS. THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE
TO ANY 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
INCORPORATED DOCUMENTS OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH
DOCUMENTS ARE SPECIFICALLY INCORPORATED BY REFERENCE THEREIN. REQUESTS FOR SUCH
COPIES SHOULD BE DIRECTED TO MR. CHARLES J. PEPE, ASSISTANT TREASURER AND
ASSISTANT SECRETARY, THE UNITED ILLUMINATING COMPANY, P.O. BOX L564, 157 CHURCH
STREET, NEW HAVEN, CONNECTICUT 06506-0901 (TELEPHONE 203-499-2311).
3
<PAGE>
THE COMPANY
The Company is an operating electric public utility company, incorporated
under the laws of the State of Connecticut in 1899. It is engaged principally in
the production, purchase, transmission, distribution and sale of electricity for
residential, commercial and industrial purposes in a service area of about 335
square miles in the southwestern part of the State of Connecticut. The
population of this area is approximately 704,000, or 21% of the population of
the State. The service area, largely urban and suburban in character, includes
the principal cities of Bridgeport (population 142,000) and New Haven
(population 130,000) and their surrounding areas. Situated in the service area
are retail trade and service centers, as well as large and small industries
producing a wide variety of products, including helicopters and other
transportation equipment, electrical equipment, chemicals and pharmaceuticals.
Of the Company's 1996 retail electric revenues, approximately 41% was derived
from residential sales, 40% from commercial sales, 17% from industrial sales and
2% from other sales.
UI has one wholly-owned subsidiary, United Resources, Inc. ("URI") that
serves as the parent corporation for UI's unregulated businesses, each of which
is incorporated separately to participate in business ventures that will
complement and enhance UI's electric utility business and serve the interests of
the Company and its shareholders and customers.
URI has four wholly-owned subsidiaries. The largest URI subsidiary,
American Payment Systems, Inc., manages a national network of agents for the
processing of bill payments made by customers of other utilities. Another
subsidiary of URI, Thermal Energies, Inc., is participating in the development
of district heating and cooling facilities in the downtown New Haven area,
including the energy center for an office tower and participation as a 62%
partner in the energy center for a city hall and office tower complex. A third
URI subsidiary, Precision Power, Inc., provides power-related equipment and
services to the owners of commercial buildings and industrial facilities. URI's
fourth subsidiary. United Bridgeport Energy, Inc., is participating in a
merchant wholesale electric generating facility being constructed on land
proposed to be leased from UI at its Bridgeport Harbor Station generating plant.
The Board of Directors of the Company has authorized the investment of a
maximum of $27 million, in the aggregate, of the Company's assets into its
unregulated subsidiary ventures and, at September 30, 1997, $27 million had been
so invested.
The Company has ownership and leasehold interests in three nuclear
generating units located in New England, including a 17.5% undivided ownership
and leasehold interest in Seabrook Unit 1, a 1,150 megawatt unit in Seabrook,
New Hampshire.
For further information about these and other matters affecting the
Company's business, see the 1996 Form 10-K and the other Incorporated Documents.
The principal executive offices of UI are located at 157 Church Street, New
Haven, CT 06506-0901 (203-499-2000).
4
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Company from the issuance and sale
of the Debt Securities will be used as set forth in the Prospectus Supplement.
Depending on future financial market conditions, the Company may use such net
proceeds from time to time to accomplish one or more of the following purposes:
payment of principal and redemption premium, if any, in connection with the
redemption or repayment at maturity of one or more series of the Company's
outstanding series of Notes; repayment of all or a portion of the principal due
on two term loans; repayment of short-term debt which the Company has incurred
or may incur under a revolving credit agreement with a group of banks; and
general corporate purposes.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities are to be issued under an indenture dated as of
August l, 1991 (the "Indenture") between the Company and The Bank of New York,
as Trustee (the "Trustee"), a copy of which has been filed with the Commission
as an exhibit to the Registration Statement of which this Prospectus is a part.
The Prospectus Supplement describes, as applicable, the following terms of
the series of Debt Securities in respect of which the Prospectus Supplement is
being delivered: (1) the title of such Debt Securities; (2) any limit on the
aggregate principal amount of such Debt Securities; (3) the date or dates on
which such Debt Securities will mature; (4) the rate or rates at which such Debt
Securities will bear interest, if any, and the date or dates from which any such
interest will accrue; (5) the price (expressed as a percentage of the aggregate
principal amount thereof) at which such Debt Securities will be issued; (6) the
Interest Payment Dates on which any such interest on such Debt Securities will
be payable, the Regular Record Date for any interest payable on such Interest
Payment Dates and the basis upon which such interest will be calculated if other
than a 360-day year of twelve 30-day months; (7) the person to whom interest is
payable on any Interest Payment Date, if other than the person in whose name
such Debt Securities are registered at the close of business on such Regular
Record Date; (8) subject to the terms of the Indenture as described below under
"Registration of Transfers; Exchanges," the place or places where the principal
of and the premium, if any, and interest, if any, on such Debt Securities will
be payable, where such Debt Securities may be surrendered for registration of
transfer and where such Debt Securities may be surrendered for exchange; (9) the
obligation, if any, of the Company to redeem or purchase such Debt Securities
pursuant to any sinking fund or analogous provisions under the Indenture 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 upon which such Debt
Securities will be redeemed or purchased, in whole or in part, pursuant to such
obligation; (10) the period or periods within which, the price or prices at
which and the terms and conditions upon which such Debt Securities may be
redeemed, in whole or in part, at the option of the Company; (11) the
denominations in which such Debt Securities will be issuable, if other than
$100,000 and any integral multiple of $1,000 in excess thereof; (12) any
additional Events of Default or covenants of the Company pertaining to such Debt
Securities; (13) whether such Debt Securities may be issued in whole or in part
in the form of one or more Global Securities (as defined below) and, if so, the
identity of the Depositary (as defined below) for such Global Security or
Securities; and (14) any other terms of such Debt Securities.
Any series of Debt Securities may be issued in whole or in part in the form
of one or more fully registered global securities (each, a "Global Security")
that would be deposited with, or on behalf of, a depositary, or its successor
(the "Depositary"), identified in the Prospectus Supplement and registered in
the name of such Depositary or its nominee and that, except under limited
circumstances, may be transferred, in whole and not in part, only to the
Depositary or to another nominee of the Depositary. If
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Debt Securities are issued in book-entry form, information regarding the
Depositary and book-entry procedures will be set forth in the Prospectus
Supplement.
The following summaries of certain provisions of the Indenture do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Indenture, including the
definitions therein of certain terms. Whenever particular sections or defined
terms of the Indenture are referred to, it is intended that such sections or
defined terms shall be incorporated herein by reference. All securities
(including the Debt Securities) issued and to be issued under the Indenture are
herein referred to as "Securities." Copies of the Indenture are available for
inspection during normal business hours at the principal office of the Company
or at the Corporate Trust Office of the Trustee, 101 Barclay Street, New York,
New York.
The Indenture does not limit the aggregate principal amount of the
Securities that may be issued thereunder and provides that the Securities may be
issued from time to time in series. All Securities
issued under the Indenture will rank equally and ratably with all other
Securities issued under the Indenture. The Indenture provides that all
Securities of any one series issued thereunder need not be issued at the same
time and that the Company may, from time to time, issue additional Securities of
a previously issued series. In addition, the Indenture provides that the Company
may issue Securities with terms different from those of any other series of
Securities and, within a series of Securities, terms (such as interest rate or
manner in which interest is calculated, original issue date, redemption
provisions and maturity date) may differ. At November 30, 1997, the Company had
issued $400 million of Notes under the Indenture, $200 million of which are
currently outstanding.
REGISTRATION OF TRANSFERS; EXCHANGES
The transfer of the Securities may be registered, and the Securities may be
exchanged for other Securities of authorized denominations and of like tenor and
aggregate principal amount, at the office of the Trustee designated for such
purpose or at any paying agency maintained by the Company for such purpose. The
Company may appoint one or more additional security registrars or transfer
agents and may remove any security registrar or transfer agent, all in its
discretion. Any additional security registrar or transfer agent appointed will
be identified in a Prospectus Supplement.
Unless otherwise set forth in the Prospectus Supplement, no service charge
will be made for any registration of transfer or exchange of the Securities, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. The Company will not be
required (a) to issue, register the transfer of or exchange Securities during a
period of 15 days immediately prior to giving any notice of redemption or (b) to
issue, register the transfer of or exchange any Security selected for redemption
in whole or in part, except the unredeemed portion of any Security being
redeemed in part. (Section 305.)
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to
Securities of any series: (a) failure to pay principal of or any premium on any
Security of such series when due; (b) failure to pay any interest on any
Security of such series within 60 days after the same becomes due and payable;
(c) failure to perform, or breach of, any covenant or warranty of the Company
contained in the Indenture in respect of (i) mergers, consolidations and sales
of assets by the Company, (ii) liens upon the assets and property of the Company
and (iii) dividends and distributions in respect of the Company's common stock;
(d) failure to perform, or breach of, any other covenant or warranty of the
Company contained in the Indenture (other than a covenant or warranty included
in the Indenture solely for the benefit of one or
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more series of Securities other than such series) for 90 days after written
notice by the Trustee to the Company, or by the Holders of at least 25% in
principal amount of the Outstanding Securities of such series to the Company and
the Trustee, as provided in the Indenture; (e) a default under any evidence of
indebtedness of the Company or instrument under which there may be issued or by
which there may be secured any indebtedness of the Company, in each case
aggregating in excess of $10,000,000, which default constitutes a failure to pay
any portion of the principal of such indebtedness when due and payable after the
expiration of any applicable grace period or results in the acceleration of the
maturity of such indebtedness, unless within a period of 10 days after written
notice of such default has been given to the Company by the Trustee, or to the
Company and the Trustee by the Holders of at least 10% in principal amount of
the Outstanding Securities of any series, such indebtedness has been discharged
or such acceleration has been rescinded or annulled; (f) certain events of
bankruptcy, insolvency, conservatorship, receivership or reorganization in
respect of the Company; and (g) any other Event of Default specified with
respect to such series. (Section 801.)
Except as described in clauses (c), (e) and (f) above, no Event of Default
with respect to the Securities of a particular series necessarily constitutes an
Event of Default with respect to the Securities of any other series issued under
the Indenture.
REMEDIES
If any Event of Default with respect to the Outstanding Securities of any
series occurs and is continuing, either the Trustee or the Holders of not less
than 33% in principal amount of the Outstanding Securities of such series may
declare the principal amount of all the Outstanding Securities of such series to
be due and payable immediately by written notice to the Company; provided,
however, that if an Event of Default occurs and is continuing with respect to
more than one series of Securities, the Trustee or the Holders of not less than
33% in aggregate principal amount of the Outstanding Securities of all such
series, considered as one class, may make such declaration of acceleration, and
not the Holders of the Securities of any of such series. (Section 802.)
The Holders of a majority in principal amount of the Outstanding Securities
of any series may, on behalf of all Holders of the Securities of that series,
waive any past default under the Indenture with respect to the Securities of
that series, except a default in the payment of principal or premium or
interest, if any, or in respect of a covenant or provision of the Indenture that
cannot be amended or modified without the consent of the Holder of each
Outstanding Security of the series affected. (Section 813.)
At any time after the declaration of acceleration with respect to the
Securities of any series has been made, but before a judgment or decree based on
acceleration has been obtained, the Event or Events of Default giving rise to
such declaration shall be deemed to have been waived and such declaration shall
be deemed 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 Securities of such series;
(2) the principal of and premium, if any, on any Securities of such
series that have become due otherwise than by such declaration of
acceleration and interest thereon at the rate or rates prescribed therefor
in such Securities;
(3) interest upon overdue interest at the rate or rates prescribed
therefor in such Securities; and
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(4) all amounts due to the Trustee under the Indenture; and
(b) any other Event or Events of Default with respect to the Securities of
such series, other than the nonpayment of the principal of the Securities of
such series that has become due solely by such declaration of acceleration, have
been cured or waived as provided in the Indenture. (Section 802.)
The Indenture provides that, subject to the duty of the Trustee during the
continuance of an Event of Default to act with the required standard of care,
the Trustee will be under no obligation to exercise any of its rights or power
under the Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable indemnity. (Sections
901 and 903.) Subject to such provisions for the indemnification of the Trustee
and subject to certain other limitations, the Holders of a majority in principal
amount of the Outstanding Securities of any series will have the right to direct
the time, method and place of conducting any proceedings for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee, with respect to the Securities of such series; provided, however, that
if an Event of Default occurs and is continuing with respect to more than one
series of Securities, the Holders of a majority in aggregate principal amount of
the Outstanding Securities of all such series, considered as one class, will
have the right to make such direction, and not the Holders of the Securities of
any one of such series; and provided, further, that (a) such direction will not
be in conflict with any rule of law or with the Indenture and would not involve
the Trustee in personal liability in circumstances where indemnity would not be
adequate and (b) the Trustee may take any other action it deems proper that is
not inconsistent with such direction. (Section 812.) The right of a Holder of
any Security to institute a proceeding with respect to the Indenture is subject
to certain conditions precedent, but each Holder has an absolute right to
receive payment of principal and premium and interest, if any, when due and to
institute suit for the enforcement of any such payment (Sections 807 and 808.)
The Indenture provides that the Trustee, within 90 days after the occurrence of
any default thereunder with respect to the Securities of a series, is required
to give the Holders of the Securities 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 of or premium or interest, if any, on any
Securities of such series, the Trustee may withhold such notice if the Trustee
determines that it is in the interest of such Holders to do so. (Section 902.)
MODIFICATION, WAIVER AND AMENDMENT
Certain modifications and amendments of the Indenture may be made by the
Company and the Trustee without the consent of the Holders, including those
that: (a) evidence the assumption by any successor to the Company of the
Company's obligations under the Indenture or with respect to the Securities; (b)
add to the covenants of or surrender any rights of the Company under the
Indenture; (c) add any Events of Default, in addition to those specified in the
Indenture, with respect to any series of Outstanding Securities; (d) change or
eliminate any provision of the Indenture or add any new provision to the
Indenture; provided, however, that if such change, elimination or addition will
materially and adversely affect the interests of Holders of Securities of any
series, such change, elimination or addition will become effective with respect
to such series only when there is no Security of such series remaining
Outstanding under the Indenture; (e) provide collateral security for the
Securities; (f) establish the form or terms of Securities of any series; (g)
evidence the appointment of a successor Trustee with respect to the Securities
of one or more series and 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; (h)
provide for the procedures required to permit the utilization of a
noncertificated system of registration for any series of Securities; (i) provide
for the creation of Securities payable in currencies other than Dollars,
Securities bearing interest at a floating rate or at a rate determined with
reference to a formula, or Securities bearing original issue discount; or (j)
cure any ambiguity or inconsistency or make any other provisions with respect to
matters and questions arising under the Indenture, provided such
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provisions shall not adversely affect the interests of the Holders of Securities
of any series in any material respect. (Section 1201.)
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 to require changes to the Indenture or the incorporation
therein of additional provisions or permit changes to, or the elimination of,
provisions that, at the date of the Indenture or at any time thereafter, are
required by the Trust Indenture Act to be contained in the Indenture, the
Company and the Trustee may, without the consent of any Holders, enter into one
or more supplemental indentures to effect or reflect any such change,
incorporation or elimination.
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 Securities of all series then
Outstanding under the Indenture and directly affected by such modification or
amendment, considered as one class; provided, however, that no such modification
or amendment may, without the consent of the Holders of each Outstanding
Security of each series so directly affected, (a) change the Stated Maturity of
the principal of, or any installment of principal of or interest on any
Security; (b) reduce the principal amount of, or premium or interest, if any, on
any Security; (c) change the currency of payment of the principal of, or premium
or rate of interest on, any Security; (d) impair the right to institute suit for
the enforcement of any payment on or with respect to any Security; (e) reduce
the percentage in principal amount of the Outstanding Securities of such series,
the consent of whose Holders is required for modification or amendment of the
Indenture, waiver of compliance with any provisions of the Indenture or waiver
of any default; (f) reduce the requirements for quorum or voting; (g) change any
obligation of the Company to maintain an office or agency in the places and for
the purposes required by the Indenture; or (h) modify any of the above
provisions or any of the provisions described above in the second paragraph
under "Remedies," except to increase the foregoing percentage or to provide that
other provisions of the Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Security affected thereby.
A supplemental indenture that 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 Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under the Indenture
of the Holders of any other Securities. (Section 1202.)
COVENANTS
MAINTENANCE OF PROPERTY. The Company will cause (or, with respect to
property owned in common with others, make reasonable effort to cause) all its
properties used or useful in the conduct of its business, whether owned or
leased, to be maintained and kept in good condition, repair and working order
and will cause (or, with respect to property owned in common with others, make
reasonable effort to cause) to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as, in the judgment of
the Company, may be necessary so that the business carried on in connection
therewith may be properly conducted; provided, however, that the foregoing shall
not prevent the Company from discontinuing, or causing the discontinuance of,
the operation and maintenance of any of its properties if such discontinuance
(a) is, in the judgment of the Company, desirable in the conduct of its business
and (b) will not adversely affect the interests of the Holders of Securities of
any series in any material respect. (Section 605.)
PRESERVATION OF RIGHTS. Subject to the provisions described in the
paragraph below entitled "Merger or Consolidation," the Company will do or cause
to be done all things necessary to preserve and
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keep in full force and effect its corporate existence and the rights (charter
and statutory) and franchises of the Company; provided, however, that the
Company shall not be required to preserve any such right or franchise if, in the
judgment of the Company, (a) preservation thereof is no longer desirable in the
conduct of the business of the Company and (b) the failure to preserve any such
right or franchise will not adversely affect the interests of the Holders of
Securities of any series in any material respect. (Section 604.)
NEGATIVE PLEDGE. The Indenture prohibits the Company from creating or
permitting any liens upon its property or assets to secure indebtedness for
borrowed money without contemporaneously (i) making effective provisions whereby
the Securities of all series shall be secured equally and ratably with such
indebtedness or (ii) depositing with the Trustee, as collateral for the
Securities, bonds or other evidences of indebtedness of the Company secured by
such lien.
The Company may, however, create or permit certain encumbrances, including:
(a) liens for taxes, assessments or governmental charges not delinquent or, if
delinquent, taxes, assessments or governmental charges that are being contested
in good faith; (b) liens securing indebtedness neither assumed nor guaranteed by
the Company nor on which it customarily pays interest charges existing in or
relating to real estate acquired by the Company for transmission, distribution
or right-of-way purposes, or in connection with its usual operations; (c)
easements or reservations in the Company's property created for the purpose of
roads, railroads, electric and pipe lines, sewers, mains, conduits, water
rights, building and use restrictions and defects of title to, or leases of, any
parts of the Company's property that do not, in the opinion of the Company's
counsel, materially impair the property as an entirety in the operation of the
Company's business; (d) undetermined liens and charges incidental to current
construction; (e) obligations or duties affecting the Company's property to any
municipality or public authority with respect to any franchise, grant, license,
permit or certificate; (f) rights reserved to or vested in any municipality or
public authority to control or regulate any property in a manner that does not
materially impair the use thereof by the Company; (g) certain title defects to
rights-of-way for mains or pipes or other improvements; (h) purchase money
mortgages, liens, pledges or security interests on or in property acquired after
the date of the Indenture or existing in such property at the time of
acquisition by the Company; (i) leases made in the ordinary course of business;
or (j) liens on assets or property of the Company to secure indebtedness in
aggregate principal amount not exceeding 2% of the Company's net tangible
utility assets.
Certain property of the Company is not subject to the prohibition against
encumbrances, including (a) cash, bonds, stocks, obligations and other
securities (including securities issued by subsidiaries of the Company); (b)
choses in action, accounts receivable, unbilled revenues, judgments and other
evidences of indebtedness and contracts, leases and operating agreements; (c)
stock in trade, merchandise, equipment, apparatus, materials or supplies
manufactured or acquired for the purpose of sale and/or resale in the usual
course of business or consumable in the operation of any of the properties of
the Company or held for purposes of repair or replacement; (d) timber, gas, oil,
minerals, mineral rights and royalties; (e) materials or products generated,
manufactured, produced or purchased by the Company for sale, distribution, or
use in the ordinary course of its business; (f) office furniture and equipment,
tools, rolling stock, buses, motor coaches, trucks and automobiles and other
vehicles and aircraft; and (g) the Company's franchise to be a corporation.
(Section 610.)
The prohibition against encumbrances is intended to prevent the Company
from having outstanding a substantial class of securities that would enjoy the
benefit of a lien against Company assets, unless the Indenture is first amended
to provide equal security for the Securities. The specified exceptions permit
minor or technical liens arising in the ordinary course of the Company's
business and liens on the Company's non-utility property. These exceptions do
not, in the judgment of the Company, materially detract from the effectiveness
of the negative pledge. Since the Securities and all of the Company's other
outstanding senior securities are unsecured, the effect of the negative pledge
is to ensure that neither these
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other senior securities, if they become secured in the future, nor any other
substantial amount of securities issued in the future, will rank higher than the
Securities through the grant of security.
DIVIDEND RESTRICTION. The Company may not declare or pay any dividends on
or make any distribution in respect of any shares of its common stock (other
than dividends or distributions payable in shares of its common stock) or,
directly or indirectly, purchase, acquire, redeem or retire shares of its common
stock if payments in respect thereof made subsequent to December 31, 1990 would,
in the aggregate, exceed the sum of (i) the net income of the Company (less
distributions in respect of shares of capital stock ranking prior to the
Company's common stock) for the period subsequent to December 31, 1990 plus (ii)
$50,000,000.
The Company may, however, engage in the purchase, redemption, acquisition
or retirement of any shares of its common stock for value to the extent the
aggregate net proceeds received by the Company from the sale solely for cash
subsequent to December 31, 1990 of shares of its common stock shall immediately
thereafter exceed the aggregate value of all purchases, redemptions,
acquisitions or retirements of common stock subsequent to December 31, 1990, and
provided that all such purchases, redemptions, acquisitions or retirements are
included in all subsequent computations made under the first clause of the
preceding paragraph. (Section 611.)
The dividend limitation in effect restricts the Company from paying
dividends on, or acquiring or retiring, its common stock by requiring that the
aggregate amount of such distributions cannot exceed the sum of (i) $50 million
of retained earnings accumulated during years prior to 1991, (ii) income after
the payment of preferred and preference stock dividends accrued during 1991 and
subsequent years, and (ii) in the case of acquisitions or retirements of common
stock, the net cash proceeds from sales of common stock during 1991 and
subsequent years (to the extent in excess of the value of acquisitions or
retirements of common stock during that time period). This covenant is designed
to afford Holders a limited measure of protection against severe diminution of
the Company's current amount of retained earnings through the declaration of
common stock dividends or other distributions on common stock.
MERGER OR CONSOLIDATION. The Company, without the consent of the Holders
of any of the Outstanding Securities under the Indenture, may merge into,
consolidate with, or sell, lease or convey all or substantially all its assets
to a successor company organized under the laws of the United States, any state
thereof or the District of Columbia, provided, however, that such successor
company assumes the Company's obligations on all Outstanding Securities and
under the Indenture, that 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, will have occurred and be continuing, and that the Company
will have delivered to the Trustee a certificate and an Opinion of Counsel as
provided in the Indenture. (Section 1101.)
The restriction on mergers and consolidations is intended to prevent the
Company from merging into or consolidating with another company if the
transaction would cause a default under any provision of the Indenture. So long
as the obligations evidenced by the Securities are assumed by a surviving U.S.
entity which is in compliance with the covenants and warranties in the
Indenture, mergers and/or consolidations are not otherwise restricted. The
Indenture does not contain any covenant or provision designed to require the
Company to redeem the Securities in response to a highly-leveraged transaction.
Holders of Securities are not protected against a possible reduction in the
value of the Securities arising from such transactions.
STATEMENT OF COMPLIANCE. The Company is required, among other things, to
furnish to the Trustee annually a statement as to the performance by the Company
of certain of its obligations under the Indenture and as to any default in such
performance. The Company is also required to notify the Trustee
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of any Event of Default within 10 days after certain of its officers obtain
actual knowledge thereof. (Section 1004.)
RELATIONSHIP OF COVENANTS TO COMPANY'S FINANCIAL CONDITION AND OPERATIONS.
None of the covenants set forth in the Indenture protect Holders, in any
substantial way, from any adverse effects of changes in the Company's financial
condition or results of operations arising out of the ordinary conduct of its
business. The Company does not believe that the covenants in the Indenture will
affect the operation of its business in any material respect.
SATISFACTION AND DISCHARGE
The Company may terminate certain of its obligations under the Indenture
with respect to Securities of any series on the terms and subject to the
conditions contained in the Indenture, by depositing in trust with the Trustee
cash or Eligible Obligations (as defined below) (or a combination thereof)
sufficient to pay the principal of and premium and interest, if any, due and to
become due on the Securities of such series on or prior to their maturity or
redemption date in accordance with the terms of the Indenture and such
Securities. (Section 701.)
The Indenture, with respect to all series of 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 of the Securities or the
deposit with the Trustee of an amount in cash or Eligible Obligations (or a
combination thereof) sufficient for such payment or redemption, in accordance
with the Indenture; (b) the payment by the Company of all other sums required
under the Indenture; and (c) the delivery of a certificate and an Opinion of
Counsel by the Company to the Trustee stating that all conditions relating to
the satisfaction and discharge of the Indenture have been complied with.
(Section 702.)
"Eligible Obligations" include: (a) with respect to Securities denominated
in United States Dollars, Government Obligations (which 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); and (b) with respect to Securities denominated
in a currency other than United States Dollars or in a composite currency, such
other obligations or instruments as shall be specified with respect to such
Securities, as contemplated by the Indenture.
If any deposit contemplated by the first paragraph of this section occurs
prior to the Stated Maturity of the Securities of any series, the Company must
provide the Trustee with an Opinion of Counsel to the effect that such deposit
and the satisfaction and discharge of the indebtedness of the Company with
respect to such Securities shall not be deemed to be, or result in, a taxable
event with respect to the Holders of such Securities for purposes of United
States federal income taxation. However, such Opinion of Counsel is not
necessary if the Trustee has received documentary evidence that each Holder of
such Securities either is not subject to, or is exempt from, United States
federal income taxation.
GOVERNING LAW
The Securities and the Indenture will be governed by and construed in
accordance with the laws of the State of New York.
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CONCERNING THE TRUSTEE
The Bank of New York also serves as trustee under an indenture executed as
part of a sale and leaseback of a portion of the Company's interest in Seabrook
Unit 1. The Bank of New York also participates, along with other banks, in a
revolving credit agreement that permits the Company to borrow funds on a
short-term basis, and in two term loan agreements, under which the Company has
borrowed $225 million maturing in 2000 and 2001.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in four ways: (i) directly to
purchasers, (ii) through agents, (iii) through underwriters and (iv) through
dealers. Any such underwriters, dealers or agents may include Morgan Stanley &
Co. Incorporated and Lehman Brothers Inc.
Offers to purchase Debt Securities may be solicited by agents designated by
the Company from time to time. Any such agent, which may be deemed to be an
underwriter as that term is defined in the Securities Act of 1933, as amended
(the "Securities Act"), involved in the offer or sale of the Debt Securities in
respect of which this Prospectus is delivered will be named, and any commissions
payable by the Company to such agent set forth, in the Prospectus Supplement.
Unless otherwise indicated in the Prospectus Supplement, any such agent will be
acting on a reasonable best efforts basis for the period of its appointment.
Agents may be entitled under agreements that may be entered into with the
Company to indemnification by the Company against certain civil liabilities,
including certain liabilities under the Securities Act, and may be customers of,
engage in transactions with or perform services for the Company in the ordinary
course of business.
If any underwriters are utilized in the sale of Debt Securities in respect
of which this Prospectus is delivered, the Company will enter into an
underwriting agreement with such underwriters at the time of sale to them and
the names of such underwriters and the terms of the transaction will be set
forth in the Prospectus Supplement, which will be used by the underwriters to
make resales of such Debt Securities to the public. The underwriters may be
entitled, under such underwriting agreement, to indemnification by the Company
against certain liabilities, including certain liabilities under the Securities
Act, and may be customers of, engage in transactions with or perform services
for the Company in the ordinary course of business.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to such dealer, as principal. Such dealer may then resell such Debt Securities
to the public at varying prices to be determined by such dealer at the time of
resale. Such dealers may be entitled to indemnification by the Company against
certain liabilities, including certain liabilities under the Securities Act, and
may be customers of, engage in transactions with or perform services for the
Company in the ordinary course of business.
If so indicated in the Prospectus Supplement, the Company will authorize
agents and underwriters or dealers to solicit offers by certain purchasers to
purchase Debt 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 on a specific date in the future. Such contracts will
be subject only to those conditions set forth in the Prospectus Supplement, and
the Prospectus Supplement will set forth the commission payable for solicitation
of such offers.
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RATIOS OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED TWELVE MONTHS ENDED DECEMBER 31,
SEPTEMBER 30, 1997 1996 1995 1994 1993 1992
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges (A).......... 1.94 2.03 2.25 1.99 1.69 1.85
</TABLE>
_____________
(A) "Earnings," as defined by Commission Regulation S-K, represent the
aggregate of (1) net income, (2) taxes based on income, (3) investment tax
credit adjustments - net and (4) fixed charges. "Fixed Charges," as
defined by Commission Regulations S-K, represent interest (whether expensed
or capitalized), related amortization and interest applicable to rentals
charged to operating expenses.
LEGAL MATTERS
Certain legal matters related to the Debt Securities will be passed upon
for the Company by Wiggin & Dana, New Haven, Connecticut, counsel for the
Company, and for any underwriters, dealers or agents by Winthrop, Stimson,
Putnam & Roberts, New York, New York.
EXPERTS
The consolidated financial statements incorporated in this Prospectus and
the financial statements schedule incorporated in the Registration Statement by
reference to the Annual Report on Form 10-K for the year ended December 31, 1996
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 consolidated financial statements and related financial statement
schedule as of December 31, 1995 and 1994 and for the two years in the period
ended December 31, 1995 incorporated in this Prospectus constituting part of the
Registration Statement on Form S-3 (File No. 33-50445) have been so included in
reliance on the reports of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of said firm as experts in auditing and accounting.
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