<PAGE>
Rule 424(b)(5)
Registration Statement No. 333-62019
Pricing Supplement Ratings:
(To prospectus dated October 5, 1998) Standard & Poor's: "AAA"
Moody's: "Aaa"
(See "Ratings" Herein)
South Jersey Gas Company
$10,000,000
7.90% Secured Medium Term Insured Quarterly Notes,
Series A 2000-2 due July 15, 2030
$15,000,000
7.70% Secured Medium Term Insured Quarterly Notes,
Series A 2000-3 due July 15, 2015
(IQ NotesSM*)
----------------
The Secured Medium Term Insured Quarterly Notes, Series A 2000-2 due 2030
which we refer to as the "30-Year IQ Notes" bear interest at the rate of 7.90%
per year. The 30-Year IQ Notes will mature on July 15, 2030. We can redeem the
30-Year IQ Notes on or after July 15, 2005 at the principal amount plus
accrued interest.
The Secured Medium Term Insured Quarterly Notes, Series A 2000-3 due 2015
which we refer to as the "15-Year IQ Notes" bear interest at the rate of 7.70%
per year. The 15-Year IQ Notes will mature on July 15, 2015. We can redeem the
15-Year IQ Notes on or after July 15, 2004 at the principal amount plus
accrued interest.
Interest on the 30-year IQ Notes and the 15-Year IQ Notes, which we refer to
collectively as the "IQ Notes," is payable quarterly on January 15, April 15,
July 15 and October 15 of each year, beginning on October 15, 2000. We will
also redeem the IQ Notes, subject to limitations, at the option of the
representative of any deceased noteholder. The IQ Notes will be available for
purchase in denominations of $1,000 and integral multiples of $1,000.
We have issued a first mortgage bond as collateral to secure the IQ Notes
and other notes issued under an indenture described in this pricing
supplement. On the date that we have retired all of our first mortgage bonds,
other than the first mortgage bond securing the IQ Notes, the IQ Notes will
either become unsecured and rank equally with all of our other unsecured
indebtedness or be secured by substitute collateral mortgage bonds.
Our timely payment of the regularly scheduled principal and interest on the
30-Year IQ Notes and the 15-Year IQ Notes will be insured by financial
guaranty insurance policies issued by Ambac Assurance Corporation.
[Ambac Logo]
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy of this pricing supplement or the accompanying prospectus. Any
representation to the contrary is a criminal offense.
Edward D. Jones & Co., L.P. has agreed to purchase the 30-Year IQ Notes at
96.85% of their principal amount and the 15-Year IQ Notes at 97.60% of their
principal amount, subject to the terms of a purchase agreement. We estimate
that the aggregate proceeds from the sale of the IQ Notes will be $23,926,000
to South Jersey Gas Company, before deducting our expenses, which we estimate
to be $1,074,000. Edward D. Jones & Co., L.P. plans to sell the IQ Notes from
time to time, in negotiated transactions or otherwise, at prices based on
either the prevailing market or negotiated prices.
The IQ Notes will be ready for delivery in book-entry form only through The
Depository Trust Company ("DTC"), on or about July 11, 2000.
----------------
--------
* IQ Notes is a service mark of Edward D. Jones & Co., L.P.
Edward D. Jones & Co., L.P.
----------------
The date of this pricing supplement is July 5, 2000.
<PAGE>
TABLE OF CONTENTS
Pricing Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Forward-Looking Statements................................................. S-2
Summary of the Offerings................................................... S-3
Use of Proceeds............................................................ S-5
Capitalization............................................................. S-5
Ratio of Earnings to Fixed Charges......................................... S-5
Description of the IQ Notes................................................ S-6
Ambac Assurance Corporation................................................ S-12
Ratings.................................................................... S-14
Plan of Distribution....................................................... S-14
Experts.................................................................... S-15
Legal Opinions............................................................. S-15
Appendix A--Form of Ambac Assurance Corporation Insurance Policy........... A-1
Prospectus
<CAPTION>
Page
----
<S> <C>
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 3
Description of Securities.................................................. 3
Description of Notes....................................................... 4
Description of The Pledged Bond............................................ 13
Plan of Distribution....................................................... 19
Legal Matters.............................................................. 20
Experts.................................................................... 20
</TABLE>
You should rely only on the information contained or incorporated by
reference in this pricing supplement or the accompanying prospectus. We have
not, and the Underwriter has not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
Underwriter is not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this pricing supplement and the accompanying
prospectus, as well as information we previously filed with the Securities and
Exchange Commission and incorporated by reference, is accurate as of the date
on the front cover of those documents only. Our business, financial condition,
results of operations and prospects may have changed since that date. In this
pricing supplement and the accompanying prospectus, "South Jersey", "us", "we"
and "our" refer to South Jersey Gas Company.
FORWARD-LOOKING STATEMENTS
Statements contained in or incorporated by reference into this pricing
supplement or the accompanying prospectus contain certain forward-looking
statements concerning projected financial and operating performance, future
plans and courses of action and future economic conditions. All such
statements other than statements of historical fact are forward-looking
statements. These forward-looking statements are intended to be covered by the
safe-harbor provision of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are made based upon management's expectations
and beliefs concerning future events impacting us and involve a number of
risks and uncertainties. We caution that forward-looking statements are not
guarantees and actual results could differ materially from those expressed or
implied in the forward-looking statements. Also, in making forward-looking
statements, we assume no duty to update these statements should expectations
change or actual results and events differ from current expectations. A number
of factors could cause our actual results to differ materially from those
anticipated, including, but not limited to the following: general economic
conditions on an international, federal, state and local level; weather
conditions in our marketing areas; regulatory and court decisions; competition
in our regulated activities; the availability and cost of capital; costs and
effects of legal proceedings and environmental liabilities; and changes in
business strategies.
S-2
<PAGE>
SUMMARY OF THE OFFERINGS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this pricing supplement and in the
accompanying prospectus.
South Jersey Gas Company
We are a regulated New Jersey public utility and are the principal subsidiary
of South Jersey Industries, Inc. ("SJI"). We are a gas distribution utility
that supplies natural gas to residential, commercial and industrial customers
in the southern part of New Jersey. We also make off-system sales of natural
gas on a wholesale basis to various customers on the interstate pipeline system
and transport natural gas purchased directly from producers or suppliers by
some of our customers.
As of March 31, 2000, we served approximately 276,000 residential, commercial
and industrial customers throughout 112 municipalities in Atlantic, Cape May,
Cumberland, and Salem counties and portions of Burlington, Camden and
Gloucester Counties, New Jersey. Our service territory covers approximately
2,500 square miles and has an estimated permanent population of 1.2 million.
Gas sales and transportation for fiscal 1999 amounted to 96,571 MMcf (million
cubic feet), of which approximately 50,080 MMcf was firm sales and
transportation, 4,011 MMcf was interruptible sales and transportation and
42,480 MMcf was off-system sales. For the year ended December 31, 1999, the
breakdown of firm sales includes 35.4% residential, 9.3% commercial, 4.6%
cogeneration and electric generation, 0.5% industrial and other and 50.2%
transportation. We are regulated as to rates and other matters by the New
Jersey Board of Public Utilities.
Our executive offices are located at 1 South Jersey Plaza, Route 54, Folsom,
New Jersey 08037 and our telephone number is (609) 561-9000.
The IQ Notes Offerings
Secured Medium Term Insured
Quarterly Notes Offered....
South Jersey is offering $25,000,000 aggregate
principal amount of IQ Notes. We are offering
$10,000,000 of the 30-Year IQ Notes which will
bear interest at a rate of 7.90% per year and
$15,000,000 of the 15-Year IQ Notes which will
bear interest at a rate of 7.70% per year.
Interest on the IQ Notes will be payable
quarterly in arrears on January 15, April 15,
July 15 and October 15 of each year beginning on
October 15, 2000.
Date of Maturity............ The 30-Year IQ Notes will mature on July 15,
2030. The 15-Year IQ Notes will mature on July
15, 2015.
Record Date................. South Jersey will make payments to the holders of
record of the IQ Notes on the first calendar day
of each January, April, July and October.
South Jersey's Optional South Jersey will have the option to redeem the
Redemption................. 30-Year IQ Notes, in whole or in part, from time
to time on or after July 15, 2005. South Jersey
will have the option to redeem the 15-Year IQ
Notes,
S-3
<PAGE>
in whole or in part, from time to time on or
after July 15, 2004. If South Jersey redeems the
30-Year IQ Notes or the 15-Year IQ Notes, it will
pay 100% of the principal amount plus the accrued
interest through the redemption date.
Redemption Option of a
Deceased Noteholder's
Representative.............
Subject to conditions specified in this pricing
supplement, South Jersey will also redeem the IQ
Notes at the option of the representative of any
deceased owner of an IQ Note. South Jersey will
pay 100% of the principal amount, plus accrued
interest, subject to the following conditions.
For the 30-Year IQ Notes, the maximum principal
amount South Jersey will redeem is $25,000 per
deceased owner and an aggregate of $200,000 for
all deceased owners during the initial period
from the date of the original issuance of the 30-
Year IQ Notes until (but not including) July 15,
2001 and during each twelve-month period
thereafter. For the 15-Year IQ Notes, the maximum
principal amount South Jersey will redeem is
$25,000 per deceased owner and an aggregate of
$300,000 for all deceased owners during the
initial period from the date of the original
issuance of the 15-Year IQ Notes until (but not
including) July 15, 2001 and during each twelve-
month period thereafter.
Insurance................... The timely payment of the regularly scheduled
principal and interest on the 30-Year IQ Notes
and the 15-Year IQ Notes will be insured by
financial guaranty insurance policies issued by
Ambac Assurance Corporation that will be issued
at the same time the IQ Notes are delivered.
Security.................... South Jersey has issued a first mortgage bond as
collateral to secure all notes issued under the
Note Indenture, including the IQ Notes. On the
date that we have retired all of our first
mortgage bonds, other than the first mortgage
bond securing the IQ Notes, the 30-Year IQ Notes
and the 15-Year IQ Notes will either become
unsecured and rank equally with all of our other
unsecured indebtedness or be secured by
substitute mortgage bonds.
Ratings..................... The IQ Notes will be rated "AAA" by Standard &
Poor's Ratings Group and "Aaa" by Moody's
Investors Services, Inc.
Use of Proceeds............. South Jersey estimates that the net proceeds of
the offerings of the IQ Notes will be
approximately $23,926,000. South Jersey intends
to use the net proceeds from the offerings to
repay short-term debt.
Ratio of Earnings to Fixed South Jersey's ratio of earnings to fixed charges
Charges.................... for the twelve months ended March 31, 2000 and
each of the years ended December 31, 1999, 1998,
1997, 1996 and 1995 was 2.5x, 2.5x, 2.2x, 2.6x,
2.5x and 2.3x, respectively.
S-4
<PAGE>
USE OF PROCEEDS
We estimate that the aggregate net proceeds from the offerings of the IQ
Notes will be $23,926,000, after deducting the estimated offering expenses of
$1,074,000, including the underwriter's commissions. We intend to use the net
proceeds to repay short-term debt. As of July 3, 2000, we had $108.0 million
of short-term debt (excluding current maturities of long-term debt). We
borrowed our short-term debt from six commercial banks at a weighted average
interest rate of 7.54% and with maturities ranging from one to 28 days. A
significant portion of our short-term debt was incurred to finance the
expansion of and improvements to our natural gas transmission and distribution
system.
CAPITALIZATION
The following table sets forth South Jersey's capitalization at March 31,
2000, and as adjusted to reflect an offering of $10,000,000 of Secured Medium
Term Notes completed on July 5, 2000, as well as the issuance of the IQ Notes
and the anticipated use of net proceeds from the IQ Notes offerings. The
following data are qualified in their entirety by reference to, and should be
read together with, the detailed information and financial statements
appearing in the documents incorporated in this pricing supplement and the
accompanying prospectus.
<TABLE>
<CAPTION>
At March 31, 2000
-----------------------
Actual As Adjusted(1)
-------- --------------
(dollars in thousands)
<S> <C> <C>
Long-Term Debt (including capital leases and excluding
current maturities)(2)............................... $181,373 $216,373
Common Shareholders' Equity........................... $195,516 $195,516
-------- --------
Total Capitalization.................................. $376,889 $411,889
======== ========
Short-Term Debt (including current maturities of long-
term debt)(2)........................................ $ 90,876 $ 57,258
======== ========
</TABLE>
--------
(1) Adjusted for the issuance of $10,000,000 principal amount of Secured
Medium Term Notes completed July 5, 2000, the net proceeds of which to
South Jersey were approximately $9,692,000, and the issuance of the IQ
Notes and the anticipated use of proceeds.
(2) Current maturates of long-term debt at March 31, 2000 were $8,876,000.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth South Jersey's ratio of earnings to fixed
charges for the periods indicated.
<TABLE>
<CAPTION>
Twelve Months
Ended Year Ended December 31,
March 31, ------------------------
2000 1999 1998 1997 1996 1995
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges...... 2.5x 2.5x 2.2x 2.6x 2.5x 2.3x
</TABLE>
--------
The ratio of earnings to fixed charges represents, on a pre-tax basis, the
number of times earnings cover fixed charges. Earnings consist of net income,
to which has been added fixed charges and taxes based on our income, excluding
the cumulative effect of an accounting change. Fixed charges consist of
interest charges and preferred securities dividend requirements and an
interest factor in rentals.
S-5
<PAGE>
DESCRIPTION OF THE IQ NOTES
Set forth below is a description of the specific terms of the IQ Notes. This
description supplements, and should be read together with, the description of
the general terms and provisions of the securities set forth in the
accompanying prospectus under the caption "Description of the Notes." The
following description does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, the description in the
accompanying prospectus and the indenture dated as of October 1, 1998, as
supplemented as of June 29, 2000 and as of July 5, 2000 (the "Note Indenture")
between South Jersey and The Bank of New York, as trustee (the "Note
Trustee"), pursuant to which the IQ Notes will be issued.
General
The IQ Notes will be issued as a series of Secured Medium Term Notes, Series
A, under the Note Indenture. The IQ Notes are not subject to any sinking fund
provision. The IQ Notes are available for purchase in denominations of $1,000
and integral multiples of $1,000.
30-Year IQ Notes
The 30-Year IQ Notes will be limited in aggregate principal amount to
$10,000,000. The entire principal amount of the 30-Year IQ Notes will mature
and become due and payable, together with any accrued and unpaid interest
thereon, on July 15, 2030.
Interest
Each 30-Year IQ Note will bear interest at 7.90% per year from the date of
original issuance, payable quarterly in arrears on January 15, April 15, July
15 and October 15 of each year, each of which we refer to as an "Interest
Payment Date," to the person in whose name such 30-Year IQ Note is registered
at the close of business on the first calendar day of the month of the
respective Interest Payment Date. The initial Interest Payment Date is October
15, 2000 and the payment on that date will include all accrued interest from
the date of issuance. The amount of interest payable will be computed on the
basis of a 360-day year of twelve 30-day months. In the event that any
Interest Payment Date is not a business day, then payment of the interest will
be made on the next business day (and without any interest or other payment in
respect of any such delay).
Optional Redemption
South Jersey shall have the right to redeem the 30-Year IQ Notes, in whole
or in part, without premium, from time to time, on or after July 15, 2005,
upon not less than 30 nor more than 60 days' notice, at a redemption price
equal to 100% of the principal amount to be redeemed plus any accrued and
unpaid interest to the redemption date.
If we give a redemption notice as described above, then the 30-Year IQ Notes
to be redeemed will become due and payable on the redemption date. South
Jersey will pay the redemption price, which includes any accrued interest.
From the redemption date, the redeemed 30-Year IQ Notes will cease to bear
interest, unless South Jersey defaults in the payment of the redemption price.
In the event of such default, the principal amount of the 30-Year IQ Notes
called for redemption will, until paid, continue to bear interest at the rate
indicated on the cover of this pricing supplement.
Our right to redeem the 30-Year IQ Notes is independent of our right to
redeem the 15-Year Notes described below. We have the right to redeem either
the 15-Year IQ Notes or the 30-Year IQ Notes in whole or in part without
redeeming the other series of IQ Notes.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), South Jersey or its
affiliates may, at any time and from time to time, purchase outstanding 30-
Year IQ Notes by tender, in the open market or by private agreement.
S-6
<PAGE>
15-Year IQ Notes
The 15-Year IQ Notes will be limited in aggregate principal amount to
$15,000,000. The entire principal amount of the 15-Year IQ Notes will mature
and become due and payable, together with any accrued and unpaid interest
thereon, on July 15, 2015.
Interest
Each 15-Year IQ Note will bear interest at 7.70% per year from the date of
original issuance, payable quarterly in arrears on January 15, April 15, July
15 and October 15 of each year to the person in whose name such 15-Year IQ
Note is registered at the close of business on the first calendar day of the
month of the respective Interest Payment Date. The initial Interest Payment
Date is October 15, 2000 and the payment on that date will include all accrued
interest from the date of issuance. The amount of interest payable will be
computed on the basis of a 360-day year of twelve 30-day months. In the event
that any Interest Payment Date is not a business day, then payment of the
interest will be made on the next business day (and without any interest or
other payment in respect of any such delay).
Optional Redemption
South Jersey shall have the right to redeem the 15-Year IQ Notes, in whole
or in part, without premium, from time to time, on or after July 15, 2004,
upon not less than 30 nor more than 60 days' notice, at a redemption price
equal to 100% of the principal amount to be redeemed plus any accrued and
unpaid interest to the redemption date.
If we give a redemption notice as described above, then the 15-Year IQ Notes
to be redeemed will become due and payable on the redemption date. South
Jersey will pay the redemption price, which includes any accrued interest.
From the redemption date, the redeemed 15-Year IQ Notes will cease to bear
interest, unless South Jersey defaults in the payment of the redemption price.
In the event of such default, the principal amount of the 15-Year IQ Notes
called for redemption will, until paid, continue to bear interest at the rate
indicated on the cover of this pricing supplement.
Our right to redeem the 15-Year IQ Notes is independent of our right to
redeem the 30-Year IQ Notes described above. We have the right to redeem
either the 15-Year IQ Notes or the 30-Year IQ Notes in whole or in part
without redeeming the other series of IQ Notes.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), South Jersey or its
affiliates may, at any time and from time to time, purchase outstanding 15-
Year IQ Notes by tender, in the open market or by private agreement.
Special Insurance Provisions of the Note Indenture
Notwithstanding any other provision of the Note Indenture, so long as Ambac
Assurance Corporation (the "Insurer") is not in default under the policies,
the Insurer shall be entitled to control and direct the enforcement of all
rights and remedies with respect to the IQ Notes, except for the rights
provided under "--Limited Right of Redemption Upon Death of Beneficial Owner."
No amendment to the Note Indenture which requires consent of holders of IQ
Notes or which affects the rights of the Insurer may be made without the prior
written consent of the Insurer.
Limited Right Of Redemption Upon Death Of Beneficial Owner
Unless the IQ Notes have been declared due and payable prior to their
maturity by reason of an Event of Default (as defined in the accompanying
prospectus), the Representative (as defined below) of a deceased Beneficial
Owner (as defined below under "Book-Entry Issuance--The Depository Trust
Company") has the right to request redemption at 100% of the principal amount
plus any accrued but unpaid interest of all or part of
S-7
<PAGE>
its interest, expressed in integral multiples of $1,000 principal amount, in
the IQ Notes for payment prior to maturity, and South Jersey will redeem the
same subject to the limitations that South Jersey will not be obligated to
redeem during the period from the date of the original issuance of the IQ
Notes until (but not including) July 15, 2001 (the "Initial Period"), and
during any twelve-month period which ends on and includes each July 15
thereafter (each such twelve-month period being hereinafter referred to as a
"Subsequent Period"):
With respect to the 30-Year IQ Notes, (1) on behalf of a deceased
Beneficial Owner, any ownership interest in such IQ Notes which exceeds an
aggregate principal amount of $25,000; or (2) ownership interests in such
IQ Notes for all Representatives of deceased Beneficial Owners so
requesting redemption in an aggregate principal amount exceeding $200,000;
and
With respect to the 15-Year IQ Notes, (1) on behalf of a deceased
Beneficial Owner, any ownership interest in such IQ Notes which exceeds an
aggregate principal amount of $25,000; or (2) ownership interests in such
IQ Notes for all Representatives of deceased Beneficial Owners so
requesting redemption in an aggregate principal amount exceeding $300,000.
A request for redemption may be initiated by the Representative of a
deceased Beneficial Owner at any time and in any principal amount in integral
multiples of $1,000 (up to the applicable maximum described above).
Representatives of deceased Beneficial Owners must make arrangements with the
Participant (as defined below under "Book-Entry Issuance--The Depository Trust
Company") through whom the deceased Beneficial Owner's interest is owned so
that the Participant, and, in turn, DTC can make redemption requests to the
Trustee. If South Jersey, although not obligated to do so, chooses to redeem
interests of a deceased Beneficial Owner in the 30-Year IQ Notes or the 15-
Year IQ Notes in the Initial Period or in any Subsequent Period in excess of
the applicable $25,000 limitation, such redemption, to the extent that it
exceeds the $25,000 limitation for any deceased Beneficial Owner, shall not be
included in the computation of the $200,000 aggregate limitation, with respect
to the 30-Year IQ Notes, or the $300,000 aggregate limitation, with respect to
the 15-Year IQ Notes, for such Initial Period or such Subsequent Period, as
the case may be, or for any succeeding Subsequent Period.
Subject to the $25,000 limitation and, either the $200,000 limitation for
the 30-Year IQ Notes or the $300,000 limitation for the 15-Year IQ Notes,
South Jersey will, after the death of any Beneficial Owner, redeem the
interest of the Beneficial Owner in the IQ Notes within 60 days following
receipt by the Note Trustee of a Redemption Request (as defined herein). If,
during the Initial Period or any Subsequent Period, Redemption Requests exceed
the applicable aggregate principal amount of interests in either the 30-Year
IQ Notes or 15-Year IQ Notes required to be redeemed, then such excess
Redemption Requests will be applied to successive Subsequent Periods,
regardless of the number of Subsequent Periods required to redeem such
interests. All Redemption Requests will be redeemed in the order in which the
Note Trustee receives the Redemption Requests, subject to the limitations for
the 30-Year IQ Notes and the 15-Year IQ Notes described above.
A request for redemption of an interest in the IQ Notes may be initiated by
the personal representative or other person authorized to represent the estate
of a deceased Beneficial Owner or from a surviving joint tenant(s) or
tenant(s) by the entirety or tenant(s) in common (each a "Representative").
The Representative shall deliver a request to the Participant through whom the
deceased Beneficial Owner owned such interest, in form satisfactory to the
Participant, together with evidence of the death of the Beneficial Owner,
evidence of the authority of the Representative satisfactory to the
Participant, such waivers, notices or certificates as may be required under
applicable state or federal law and such other evidence of the right to such
redemption as the Participant shall require. The request shall specify the
principal amount of the interest in the IQ Notes to be redeemed. The
Participant shall thereupon deliver to DTC a request for redemption
substantially in the form attached as an exhibit to the Note Indenture (a
"Redemption Request"), accompanied by the documents submitted to the
Participant as above provided, and DTC will forward the same to the Note
Trustee. Documents accompanying Redemption Requests must be in form
satisfactory to South Jersey. The Note Trustee may conclusively assume,
without independent investigation, that the statements contained in each
Redemption Request are true and correct and shall have no responsibility for
reviewing any documents accompanying a Redemption Request.
S-8
<PAGE>
The price to be paid by South Jersey for an interest in the IQ Notes to be
redeemed pursuant to a request on behalf of a deceased Beneficial Owner is
100% of the principal amount thereof plus accrued but unpaid interest to the
date of payment. Subject to arrangements with DTC, payment for interests in
the IQ Notes which are to be redeemed shall be made to DTC upon presentation
of IQ Notes to the Note Trustee for redemption in the aggregate principal
amount specified in the Redemption Requests submitted to the Note Trustee by
DTC which are to be fulfilled in connection with such payment. Any acquisition
of IQ Notes by South Jersey other than by redemption at the option of any
Representative of a deceased Beneficial Owner shall not be included in the
computation of (1) the $25,000 individual limitation for the IQ Notes or (2)
either the $200,000 aggregate limitation with respect to the 30-Year IQ Notes,
or the $300,000 aggregate limitation with respect to the 15-Year IQ Notes, for
the Initial Period or for any Subsequent Period.
Interests in the IQ Notes held in tenancy by the entirety, joint tenancy or
by tenants in common will be deemed to be held by a single Beneficial Owner,
and the death of a tenant in common, tenant by the entirety or joint tenant
will be deemed the death of a Beneficial Owner. The death of a person who,
during such person's lifetime, was entitled to substantially all of the rights
of a Beneficial Owner of an interest in the IQ Notes will be deemed the death
of the Beneficial Owner, regardless of the recordation of such interest on the
records of the Participant, if such rights can be established to the
satisfaction of the Participant and South Jersey. Such interest shall be
deemed to exist in typical cases of nominee ownership, ownership under the
Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act, community
property or other similar joint ownership arrangements, including individual
retirement accounts or Keogh plans maintained solely by or for the decedent or
by or for the decedent and any spouse, and trusts and certain other
arrangements where one person has substantially all of the rights of a
Beneficial Owner during the person's lifetime.
In the case of a Redemption Request which is presented on behalf of a
deceased Beneficial Owner and which has not been fulfilled at the time South
Jersey gives notice of its election to redeem the IQ Notes, the interests in
the IQ Notes which are the subject of such Redemption Request shall not be
eligible for redemption pursuant to South Jersey's option to redeem but shall
remain subject to redemption pursuant to such Redemption Request.
Subject to the provisions of the immediately preceding paragraph, any
Redemption Request may be withdrawn upon delivery of a written request for
such withdrawal given to the Note Trustee by DTC prior to payment for
redemption of the interest in the IQ Notes by reason of the death of a
Beneficial Owner.
South Jersey is legally obligated to redeem IQ Notes and interests of
Beneficial Owners therein properly presented for redemption pursuant to a
Redemption Request in accordance with and subject to the terms, conditions and
limitations of the Note Indenture, as summarized above. South Jersey's
redemption obligation is not cumulative. Nothing in the Note Indenture
prohibits South Jersey from redeeming, in fulfillment of Redemption Requests
made pursuant to the Note Indenture, IQ Notes or interests therein of
Beneficial Owners in excess of the principal amount South Jersey is obligated
to redeem, nor does anything in the Note Indenture prohibit South Jersey from
purchasing any IQ Notes or interests therein in the open market. However,
South Jersey may not use any IQ Notes redeemed or purchased as described in
the immediately preceding sentence as a credit against its redemption
obligation.
Because of the limitations of South Jersey's requirement to redeem, no
Beneficial Owner can have any assurance that its interest in the IQ Notes will
be paid prior to maturity.
Security; Substitution Date
South Jersey's First Mortgage Bond, 10% Medium Term Notes Series A (the
"Pledged Bond") has been issued under the Indenture of First Mortgage, dated
October 1, 1947, as heretofore supplemented and amended by supplemental
indentures, including a Twenty-Second Supplemental Indenture (the "New
Supplement") (such Indenture of First Mortgage, as supplemented, is herein
referred to as the "Mortgage"), all from South Jersey to The Bank of New York,
as successor trustee to Guaranty Bank (the "Mortgage Trustee"), and pledged to
the Note Trustee under the Note Indenture to secure notes issued under the
Note Indenture, including the IQ Notes.
S-9
<PAGE>
Until the Substitution Date (as defined below), the IQ Notes will be secured
by the Pledged Bond issued and delivered by us to the Note Trustee.
The "Substitution Date" will be the date that all First Mortgage Bonds of
South Jersey issued and outstanding under the Mortgage other than the Pledged
Bond (the "First Mortgage Bonds") have been retired (at, before or after the
maturity thereof) through payment, redemption or otherwise (including those
First Mortgage Bonds deemed to be paid within the meaning of the Mortgage). On
the Substitution Date, the Note Trustee will deliver to us for cancellation
the Pledged Bond, and we will cause the Note Trustee to provide notice to all
holders of IQ Notes of the occurrence of the Substitution Date. As a result,
on the Substitution Date, the Pledged Bond will cease to secure the IQ Notes
and any other notes issued under the Note Indenture, and, at our option, the
IQ Notes and any other notes issued under the Indenture will either (1) become
unsecured general obligations of South Jersey or (2) be secured by substituted
pledged bonds.
Prior to the Substitution Date, South Jersey shall make payments of the
principal of, and premium or interest on, the Pledged Bond to the Note
Trustee, which payments shall be applied by the Note Trustee to satisfaction
of all obligations then due on the IQ Notes.
If South Jersey does not elect to have the IQ Notes become unsecured on the
Substitution Date, South Jersey will simultaneously issue and deliver to the
Note Trustee, as security for the IQ Notes and the other notes issued under
the Note Indenture, substituted pledged bonds. The substituted pledged bonds
will have the same interest rate, interest payment dates, stated maturity date
and redemption provisions, and will be in the same aggregate principal amount,
as all notes issued under the Note Indenture then outstanding. South Jersey
will be required to give notice to the holders of the IQ Notes of the
occurrence of the Substitution Date.
In the event South Jersey elects to have the IQ Notes become unsecured on
the Substitution Date, South Jersey's ability to create, assume or incur
certain liens or to enter into certain financing transactions will be
restricted as described in "Description of the Notes--Limitations on Liens" in
the accompanying prospectus.
Book-Entry Only Issuance--The Depository Trust Company
DTC will act as the initial securities depositary for the IQ Notes. The IQ
Notes will be issued only as fully registered securities registered in the
name of Cede & Co., DTC's nominee. One or more fully registered global IQ
Notes will be issued, representing in the aggregate the total principal amount
of IQ Notes, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934 (the "Exchange Act"). DTC holds securities that its
participants ("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 ("Direct Participants"). 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 ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Securities and Exchange Commission.
Purchases of IQ Notes within the DTC system must be made by or through
Direct Participants, which will receive a credit for the IQ Notes on DTC's
records. The ownership interest of each actual purchaser of IQ Notes (such
purchaser, or the person to whom such purchaser conveys his or her ownership
interest, a "Beneficial
S-10
<PAGE>
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 purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased IQ Notes. Transfers of ownership
interests in the IQ 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 IQ Notes,
except in the event that use of the book-entry system for the IQ Notes is
discontinued, South Jersey determines that Beneficial Owners may exchange their
ownership interests for such certificates or there shall have occurred an Event
of Default.
DTC will have no knowledge of the actual Beneficial Owners of the IQ Notes.
DTC's records reflect only the identity of the Direct Participants to whose
accounts such IQ 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 will be sent to DTC. If less than all of the IQ Notes are
being redeemed, DTC will reduce the amount of the interest of each Direct
Participant in the IQ Notes in accordance with its procedures.
Although voting with respect to the IQ Notes is limited, in those cases where
a vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to IQ Notes. Under its usual procedures, DTC would mail an Omnibus
Proxy to South Jersey 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 IQ Notes are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Payments on the IQ Notes will be made to DTC. DTC's practice is to credit
Direct Participants' accounts on the relevant payment date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment 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 account of
customers registered in "street name," and will be the responsibility of such
Participant and not of DTC or South Jersey, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment to DTC
is the responsibility of South Jersey, disbursements of such payments to Direct
Participants is the responsibility of DTC and disbursements of such payments to
the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
Except as provided herein, a Beneficial Owner of an interest in a global IQ
Note will not be entitled to receive physical delivery of IQ Notes.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the IQ Notes. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of securities in
definitive form. Such laws may impair the ability to transfer beneficial
interests in a global IQ Note.
DTC may discontinue providing its services as security depositary with
respect to the IQ Notes at any time by giving reasonable notice to South
Jersey. Under such circumstances, in the event that a successor securities
depositary is not obtained, IQ Note certificates will be printed and delivered
to the holders of record. Additionally, South Jersey may decide to discontinue
use of the system of book-entry transfers through DTC (or a successor
depositary) with respect to the IQ Notes. In that event, certificates for the
IQ Notes will be printed and delivered to the holders of record.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that South Jersey believes to be reliable, but
South Jersey takes no responsibility for the accuracy thereof.
S-11
<PAGE>
South Jersey has no responsibility for the performance by DTC or its
Participants of their respective obligations as described herein or under the
rules and procedures governing their respective operations.
AMBAC ASSURANCE CORPORATION
The following information has been furnished by Ambac Assurance Corporation
(the "Insurer") for use in this pricing supplement. No representation is made
by South Jersey or the Underwriter as to the accuracy or completeness of such
information. Reference is made to Appendix A for a specimen of the Insurer's
policy.
The Policies
The Insurer has committed to issue two financial guaranty insurance
policies, one for the 30-Year IQ Notes and one for the 15-Year IQ Notes (each
a "Policy" and collectively the "Policies"), effective as of the date of
issuance of the IQ Notes. Under the terms of each Policy, the Insurer will pay
to the United States Trust Company of New York, in New York, New York or any
successor thereto (the "Insurance Trustee") that portion of the principal of
and interest on the applicable IQ Notes which shall become Due for Payment but
shall be unpaid by reason of Nonpayment by the Issuer (as such terms are
defined in the Policy). The Insurer will make such payments to the Insurance
Trustee on the later of the date on which such principal and interest becomes
Due for Payment or within one business day following the date on which the
Insurer shall have received notice of Nonpayment from the Note Trustee. The
insurance will extend for the term of the applicable IQ Notes and, once
issued, cannot be canceled by the Insurer.
Each Policy will insure payment only on stated maturity dates, in the case
of principal, and on stated dates for payment, in the case of interest. In the
event of any acceleration of the principal of the IQ Notes by reason of
mandatory or optional redemption and insufficient funds are available for
redemption of all the applicable outstanding IQ Notes so accelerated, the
Insurer will remain obligated to pay principal of and interest on any
outstanding IQ Notes on the originally scheduled interest and principal
payment dates. In the event of any acceleration of the principal of any of the
IQ Notes, the insured payments will be made at such times and in such amounts
as would have been made had there not been an acceleration.
In the event the Note Trustee has notice that any payment of principal of or
interest on an IQ Note which has become Due for Payment and which is made to a
noteholder by or on behalf of South Jersey has been deemed a preferential
transfer and theretofore recovered from its registered owner pursuant to the
United States Bankruptcy Code in accordance with a final, nonappealable order
of a court of competent jurisdiction, such registered owner will be entitled
to payment from the Insurer to the extent of such recovery if sufficient funds
are not otherwise available.
The Policies do not insure any risk other than Nonpayment, as defined in the
Policies. Specifically, the Policies do not cover:
1. payment on acceleration, as a result of a call for redemption (other
than mandatory sinking fund redemption) or as a result of any other
advancement of maturity.
2. payment of any redemption, prepayment or acceleration premium.
3. nonpayment of principal or interest caused by the insolvency or
negligence of the Note Trustee or paying agent, if any.
If it becomes necessary to call upon a Policy, payment of principal requires
surrender of IQ Notes to the Insurance Trustee together with an appropriate
instrument of assignment so as to permit ownership of such IQ Notes to be
registered in the name of the Insurer to the extent of the payment under the
applicable Policy. Payment of interest pursuant to a Policy requires proof of
noteholder entitlement to interest payments and an appropriate assignment of
the noteholder's right to payment to the Insurer.
Upon payment of the insurance benefits, the Insurer will become the owner of
the IQ Note, appurtenant coupon, if any, or right to payment of principal or
interest on such IQ Note and will be fully subrogated to the surrendering
noteholder's rights to payment.
S-12
<PAGE>
The Insurer
The Insurer is a Wisconsin-domiciled stock insurance corporation regulated
by the Office of the Commissioner of Insurance of the State of Wisconsin and
licensed to do business in 50 states, the District of Columbia, the
Commonwealth of Puerto Rico and the Territory of Guam. The Insurer primarily
insures newly issued municipal and structured finance obligations. The Insurer
is a wholly-owned subsidiary of Ambac Financial Group, Inc. (formerly, AMBAC
Inc.), a 100% publicly-held company. Moody's Investors Service, Inc.
("Moody's"), Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. ("S&P") and Fitch IBCA, Inc. have each assigned a triple-A
financial strength rating to the Insurer.
The consolidated financial statements of the Insurer and its subsidiaries as
of December 31, 1999 and December 31, 1998 and for each of the years in the
three-year period ended December 31, 1999, prepared in accordance with
generally accepted accounting principles, included in the Annual Report on
Form 10-K of Ambac Financial Group, Inc. which was filed with the Securities
and Exchange Commission on March 30, 2000, Commission File No. 1-0777; and the
unaudited consolidated financial statements of the Insurer and subsidiaries as
of March 31, 2000 and for the periods ending March 31, 2000 and March 31,
1999, included in the Quarterly Report on Form 10-Q of Ambac Financial Group,
Inc. for the period ended March 31, 2000 which was filed with the Securities
and Exchange Commission on May 12, 2000, are incorporated by reference into
this pricing supplement and are deemed to constitute a part of this pricing
supplement. Any statement contained in a document incorporated by reference
shall be modified or superseded for the purposes of this pricing supplement to
the extent that a statement contained or incorporated by reference in this
pricing supplement also modifies or supersedes that statement. Any statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this pricing supplement.
All financial statements of the Insurer and its subsidiaries included in
documents filed by Ambac Financial Group, Inc. with the Securities and
Exchange Commission under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, subsequent to the date of this pricing supplement and
prior to the termination of the offerings of the IQ Notes are deemed to be
incorporated by reference into this pricing supplement and to be a part of
this pricing supplement from the respective dates of filing of the financial
statements.
The following table sets forth the capitalization of the Insurer as of
December 31, 1998, December 31, 1999 and March 31, 2000, respectively, in
conformity with generally accepted accounting principles.
Ambac Assurance Corporation
Consolidated Capitalization Table
(dollars in millions)
<TABLE>
<CAPTION>
December 31, December 31, March 31,
1998 1999 2000
------------ ------------ -----------
(Unaudited)
<S> <C> <C> <C>
Unearned premiums........................ $1,303 $1,442 $1,428
Other liabilities........................ 548 524 477
------ ------ ------
Total liabilities........................ $1,851 $1,966 $1,905
====== ====== ======
Stockholder's equity
Common stock........................... $ 82 $ 82 $ 82
Additional paid-in capital............. 541 752 752
Accumulated other comprehensive income
(loss)................................ 138 (92) (36)
Retained earnings...................... 1,405 1,674 1,749
------ ------ ------
Total stockholder's equity............... $2,166 $2,416 $2,547
------ ------ ------
Total liabilities and stockholder's
equity.................................. $4,017 $4,382 $4,452
====== ====== ======
</TABLE>
S-13
<PAGE>
For additional financial information concerning the Insurer, see the audited
and unaudited financial statements of the Insurer incorporated by reference in
this pricing supplement. Copies of the financial statements of the Insurer
incorporated by reference in this pricing supplement and copies of the
Insurer's annual statement for the year ended December 31, 1999 prepared in
accordance with statutory accounting standards are available, without charge,
from the Insurer. The address of the Insurer's administrative offices and its
telephone number are One State Street Plaza, 17th Floor, New York, New York
10004 and (212) 668-0340.
The Insurer makes no representation regarding the IQ Notes or the
advisability of investing in the IQ Notes and makes no representation
regarding, nor has it participated in the preparation of, this pricing
supplement other than the information supplied by the Insurer and presented
under the heading "Ambac Assurance Corporation" in this pricing supplement and
in the financial statements incorporated in this pricing supplement by
reference.
RATINGS
S&P and Moody's will assign the IQ Notes the ratings of "AAA" and "Aaa,"
respectively, conditioned upon the issuance and delivery by the Insurer at the
time of delivery of the IQ Notes of the policy, insuring the timely payment of
the principal of and interest on the IQ Notes. Such ratings reflect only the
views of such rating agencies, and an explanation of the significance of such
ratings may be obtained only from such rating agencies at the following
addresses: Moody's Investors Service, Inc., 99 Church Street, New York, New
York 10007; and Standard & Poor's, 25 Broadway, New York, New York 10004.
There is no assurance that such ratings will remain in effect for any period
of time or that they will not be revised downward or withdrawn entirely by the
rating agencies if, in their judgment, circumstances warrant. Neither South
Jersey nor the Underwriter has undertaken any responsibility to oppose any
proposed downward revision or withdrawal of a rating on the IQ Notes. Any such
downward revision or withdrawal of such ratings may have an adverse effect on
the market price of the IQ Notes.
At present, each of such rating agencies maintains four categories of
investment grade ratings. They are for S&P--AAA, AA, A and BBB and for
Moody's--Aaa, Aa, A and Baa. S&P defines "AAA" as the highest rating assigned
to a debt obligation. Moody's defines "Aaa" as representing the best quality
debt obligation carrying the smallest degree of investment risk.
PLAN OF DISTRIBUTION
Subject to the terms and conditions of the Distribution Agreement, as
amended, including the related Terms Agreement, South Jersey has agreed to
sell to Edward D. Jones & Co., L.P. (the "Underwriter"), and the Underwriter
has agreed to purchase from South Jersey, the entire principal amount of the
IQ Notes at the prices set forth on the cover page of this pricing supplement.
The Underwriter has advised South Jersey that it proposes to offer the IQ
Notes from time to time for sale in one or more negotiated transactions or
otherwise, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. The Underwriter may
effect such transactions by selling the IQ Notes to or through dealers, and
such dealers may receive compensation in the form of underwriting discounts,
concessions or commissions from the Underwriter and/or the purchasers of the
IQ Notes for whom they may act as agent. The Underwriter and any dealers that
participate with the Underwriter in the distribution of the IQ Notes may be
deemed to be underwriters, and any discounts or commissions received by them
and any profit on the resale of the IQ Notes by them may be deemed to be
underwriting discounts or commissions, under the Securities Act of 1933.
Prior to these offerings, there has been no public market for the IQ Notes.
The Underwriter has advised South Jersey that it intends to make a market in
the IQ Notes. The Underwriter will have no obligation to make a market in the
IQ Notes, however, and may cease market making activities, if commenced, at
any time. The IQ Notes will not be listed on the New York Stock Exchange or
any other exchange.
S-14
<PAGE>
South Jersey has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments the Underwriter may be required to make in respect
thereof.
In order to facilitate the offerings of the IQ Notes, the Underwriter may
engage in transactions that stabilize, maintain or otherwise affect the prices
of the IQ Notes. Specifically, the Underwriter may over-allot in connection
with the offerings, creating a short position in the IQ Notes for its own
account. In addition, to cover over-allotments or to stabilize the prices of
the IQ Notes, the Underwriter may bid for, and purchase, IQ Notes in the open
market. The Underwriter may reclaim selling concessions allowed to a dealer
for distributing IQ Notes in the offerings, if the Underwriter repurchases
previously distributed IQ Notes in transactions to cover short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market prices of the IQ Notes above independent market levels.
The Underwriter is not required to engage in these activities, and, if
commenced, may end any of these activities at any time.
South Jersey has agreed, during the period of 15 days from the date on which
the IQ Notes are purchased by the Underwriter, not to sell, offer to sell,
grant any option for the sale of, or otherwise dispose of any IQ Notes, any
security convertible into or exchangeable into or exercisable for IQ Notes or
any debt securities substantially similar to the IQ Notes, without the prior
written consent of the Underwriter.
EXPERTS
The financial statements and the related financial statement schedules
included in our Annual Report on Form 10-K for the year ended December 31,
1999 incorporated in this pricing supplement and the accompanying prospectus
by reference have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report, which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements of Ambac Assurance Corporation and
subsidiaries as of December 31, 1999 and 1998 and for each of the years in the
three-year period ended December 31, 1999 are incorporated by reference in
this pricing supplement and registration statement, in reliance on the report
of KPMG LLP, independent certified public accountants, incorporated by
reference in this pricing supplement and upon the authority of said firm as
experts in accounting and auditing.
LEGAL OPINIONS
Certain legal matters will be passed upon for South Jersey by Cozen and
O'Connor, Philadelphia, Pennsylvania, counsel to South Jersey. Certain legal
matters will be passed upon for Edward D. Jones & Co., L.P. by Chapman and
Cutler, Chicago, Illinois.
S-15
<PAGE>
[SPECIMEN APPEARS ACROSS PAGE]
Ambac
Financial Guaranty Insurance Policy
Ambac Assurance Corporation
c/o CT Corporation Systems
44 East Mifflin Street, Madison, Wisconsin 53703
Administrative Office:
One State Street Plaza, New York, New York 10004
Telephone: (212) 668-0304
Obligor: Policy Number:
Obligations: Premium:
Ambac Assurance Corporation (Ambac) A Wisconsin Stock Insurance Company in
consideration of the payment of the premium, and subject to the terms of this
Policy, hereby agrees to pay to United States Trust Company of New York, as
trustee, or its successor (the "Insurance Trustee"), for the benefit of the
Obligees, that portion of the principal of and interest on the above-described
obligations (the "Obligations") which shall become Due for Payment but shall be
unpaid by reason of Nonpayment by the Obligor.
Ambac will make such payments to the Insurance Trustee within one (1) business
day following notification to Ambac of Nonpayment. Upon an Obligee's
presentation and surrender to the Insurance Trustee of such unpaid Obligations
or appurtenant coupons, uncanceled and in bearer form and free of any adverse
claim, the Insurance Trustee will disburse to the Obligee the face amount of
principal and interest which is then Due for Payment but is unpaid. Upon such
disbursement, Ambac shall become the owner of the surrendered Obligations and
coupons and shall be fully subrogated to all of the Obligee's rights to payment.
In cases where the Obligations are issuable only in a form whereby principal is
payable to registered Obligees or their assigns, the Insurance Trustee shall
disburse principal to an Obligee as aforesaid only upon presentation and
surrender to the Insurance Trustee of the unpaid Obligation, uncanceled and free
of any adverse claim, together with an instrument of assignment, in form
satisfactory to the Insurance Trustee duly executed by the Obligee or such
Obligee's duly authorized representative, so as to permit
ownership of such Obligation to be registered in the name of Ambac or its
nominee. In cases where the Obligations are issuable only in a form whereby
interest is payable to registered Obligees or their assigns the Insurance
Trustee shall disburse interest to an Obligee as aforesaid only upon
presentation to the Insurance Trustee of proof that the claimant is the person
entitled to the payment of interest on the Obligation and delivery to the
Insurance Trustee of an instrument of assignment, in form satisfactory to the
Insurance Trustee, duly executed by the claimant Obligee or such Obligee's duly
authorized representative, transferring to Ambac all rights under such
Obligation to receive the interest in respect of which the insurance
disbursement was made. Ambac shall be subrogated to all of the Obligees' rights
to payment on registered Obligations to the extent of the insurance
disbursements so made.
In the event that a trustee or paying agent for the Obligations has notice that
any payment of principal of or interest on an Obligation which has become Due
for Payment and which is made to an Obligee by or on behalf of the Obligor has
been deemed a preferential transfer and theretofore recovered from the Obligee
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court of competent jurisdiction, such Obligee will be
entitled to payment from Ambac to the extent of such recovery if sufficient
funds are not otherwise available.
As used herein, the term "Obligee" means any person other than the Obligor who,
at the time of Nonpayment, is the owner of an Obligation or of a coupon
appertaining to an Obligation. As used herein, "Due for Payment", when referring
to the principal of Obligations, is when the stated maturity date or mandatory
redemption date for the application of a required sinking fund installment has
been reached and does not refer to any earlier date on which payment is due by
reason of call for redemption (other than by application of required sinking
fund installments), acceleration or other advancement of maturity; and, when
referring to interest on the Obligations, is when the stated date for payment of
interest has been reached. As used herein, "Nonpayment" means the failure of the
Obligor to have provided sufficient funds to the paying agent for payment in
full of all principal of and interest on the Obligations which are Due for
Payment.
This Policy is noncancelable. The premium on this Policy is not refundable for
any reason, including payment of the Obligations prior to maturity. This Policy
does not insure against loss of any prepayment or other acceleration payment
which at any time may become due in respect of any Obligation, other than at the
sole option of Ambac, nor against any risk other than Nonpayment.
In witness whereof, Ambac has caused this Policy to be affixed with a facsimile
of its corporate seal and to be signed by its duly authorized officers in
facsimile to become effective as its original seal and signatures and binding
upon Ambac by virtue of the countersignature of its duly authorized
representative.
[SEAL APPEARS HERE]
Signature Appears Here Signature Appears Here
President Secretary
Effective Date: Authorized Representative
Signature Appears Here
Authorized Officer
UNITED STATES TRUST COMPANY OF NEW YORK acknowledges that it has agreed to
perform the duties of Insurance Trustee under this Policy.
Form No.: 2B-0012(7/97)
A-1
<PAGE>
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No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in
this pricing supplement or the prospectus and, if given or made, such
information or representations must not be relied upon as having been
authorized. This pricing supplement and the prospectus do not constitute an
offer or solicitation by anyone in any state in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make such offer or solicitation. Neither the delivery of this pricing
supplement or the prospectus nor any sale made hereunder or thereunder shall
under any circumstance create an implication that there has been no change in
the affairs of the South Jersey or the Insurer since the date hereof.
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
Pricing Supplement
<S> <C>
Forward-Looking Statements................................................. S-2
Summary of the Offerings................................................... S-3
Use of Proceeds............................................................ S-5
Capitalization............................................................. S-5
Ratio of Earnings to Fixed Charges......................................... S-5
Description of the IQ Notes................................................ S-6
Ambac Assurance Corporation................................................ S-12
Ratings.................................................................... S-14
Plan of Distribution....................................................... S-14
Experts.................................................................... S-15
Legal Opinions............................................................. S-15
Appendix A--Form of Ambac Assurance Corporation Insurance Policy........... A-1
Prospectus
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Use of Proceeds............................................................ 3
Description of Securities.................................................. 3
Description of Notes....................................................... 4
Description of The Pledged Bond............................................ 13
Plan of Distribution....................................................... 19
Legal Matters.............................................................. 20
Experts.................................................................... 20
</TABLE>
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South Jersey Gas Company
$10,000,000
7.90% Secured Medium Term
Insured Quarterly Notes
due July 15, 2030
$15,000,000
7.70% Secured Medium Term
Insured Quarterly Notes
due July 15, 2015
(IQ NotesSM)
-----------
PROSPECTUS SUPPLEMENT
-----------
Edward D. Jones & Co., L.P.
July 5, 2000
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