<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER 17, 1993)
$40,000,000
WESTERN MASSACHUSETTS ELECTRIC COMPANY
FIRST MORTGAGE BONDS, SERIES X, 6 1/4%, DUE MARCH 1, 1999
------------------------
Interest payable March 1 and September 1
------------------------
THE SERIES X BONDS WILL NOT BE REDEEMABLE PRIOR TO MATURITY. THE SERIES X BONDS
WILL BE REPRESENTED BY A GLOBAL SECURITY REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (DTC) OR ITS NOMINEE. BOOK-ENTRY INTERESTS IN
THE GLOBAL SECURITY WILL BE SHOWN ON, AND TRANSFERS THEREOF WILL BE
EFFECTED ONLY THROUGH, RECORDS MAINTAINED BY DTC OR ITS
NOMINEE.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
PRICE 99.634% AND ACCRUED INTEREST, IF ANY
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(3)
------------- --------------- --------------
<S> <C> <C> <C>
Per Bond................................................. 99.634% .208% 99.426%
Total.................................................... $39,853,600 $83,200 $39,770,400
</TABLE>
- ------------
(1) Plus accrued interest, if any, from date of original issuance.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including certain liabilities under the Securities Act of
1933, as amended.
(3) Before deducting expenses payable by the Company estimated at $150,000.
------------------------------
The Series X Bonds are offered by the Underwriter, subject to prior sale,
when, as and if issued by the Company and accepted by the Underwriter and
subject to approval of certain legal matters by Winthrop, Stimson, Putnam &
Roberts, counsel for the Underwriter. It is expected that delivery of the Series
X Bonds will be made on or about March 22, 1994 through the book-entry
facilities of The Depository Trust Company, against payment therefor in New York
funds.
------------------------------
MORGAN STANLEY & CO.
INCORPORATED
March 8, 1994
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES X BONDS
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
SUMMARY INFORMATION
The following material is qualified in its entirety by, and should be
considered in conjunction with, the information and financial statements
appearing elsewhere in this Prospectus Supplement and the accompanying
Prospectus, and in the documents and information incorporated by reference.
THE OFFERING
<TABLE>
<S> <C>
Securities Offered........................ $40,000,000 principal amount of First Mortgage Bonds, Series X,
6 1/4% (Series X Bonds).
Maturity.................................. March 1, 1999.
Interest Payment Dates.................... March 1 and September 1.
</TABLE>
SELECTED FINANCIAL INFORMATION
(THOUSANDS, EXCEPT PERCENTAGES AND RATIOS)
<TABLE>
<CAPTION>
12 MONTHS
YEAR ENDED DEDEMBER 31, ENDED
--------------------------------------- JANUARY
1991 1992 1993 31, 1994
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Income Summary:
Operating Revenues........................... $ 409,840 $ 410,720 $ 415,055 $ 416,893
Operating Income............................. $ 59,723 $ 60,513 $ 60,067 $ 60,350
Income before cumulative effect of accounting
change..................................... $ 34,637 $ 37,022 $ 36,672 $ 37,181
Cumulative effect of accounting change (a)... -- -- $ 3,922 --
Net Income................................... $ 34,637 $ 37,022 $ 40,594 $ 37,181
Total Assets (end of period)...................... $1,119,593 $1,130,684 $1,204,642(b) $ 1,198,972
</TABLE>
<TABLE>
<CAPTION>
AS OF JANUARY 31, 1994
-----------------------------------------
(UNAUDITED)
AS % OF ADJUSTED
ACTUAL ADJUSTED(c) CAPITALIZATION
-------- ----------- --------------
<S> <C> <C> <C>
Capitalization Summary:
Long-Term Debt (including current maturities)................. $393,322 $ 379,753 49.9%
Preferred Stock Subject to Mandatory Redemption (including
portion to be redeemed within one year)..................... 27,000 27,000 3.5
Preferred Stock Not Subject to Mandatory Redemption (including
portion to be redeemed within one year)..................... 73,500 73,500 9.7
Common Stockholder's Equity................................... 280,411 280,411 36.9
-------- ----------- ------
Total Capitalization..................................... $774,233 $ 760,664 100.0%
-------- ----------- ------
-------- ----------- ------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1989 1990 1991 1992 1993
---- ---- ---- ---- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges................................ 2.12 2.00 2.26 2.43 2.81
</TABLE>
- ------------
(a) The cumulative effect is a result of a one-time change in the Company's
method of accounting for property taxes that was booked during the first
quarter of 1993.
(b) The Company adopted Statement of Financial Accounting Standards No. 109,
'Accounting for Income Taxes' during 1993. At December 31, 1993, deferred
taxes and the corresponding regulatory asset were approximately $94.4
million.
(c) Adjusted to reflect the proposed sale of $40 million principal amount of
Series X Bonds and $50 million principal amount of Series Y Bonds being
concurrently issued and the redemption of approximately $103.6 million of
bonds previously issued by the Company. The differential between the net
proceeds from the proposed sale of Series X and Series Y Bonds and the
funds required to redeem the previously issued series will be met through
the issuance of additional short-term debt. See 'Supplemental Description
of the Series X Bonds -- Use of Proceeds.'
S-2
<PAGE>
SUPPLEMENTAL DESCRIPTION OF
THE SERIES X BONDS
This Prospectus Supplement relates to the issue and sale of $40,000,000
principal amount of First Mortgage Bonds, Series X, 6 1/4%, due March 1, 1999
(Series X Bonds) of Western Massachusetts Electric Company (the Company), which
are to be offered and sold under the accompanying Prospectus (the Prospectus).
The section of the Prospectus entitled 'Description of the New Bonds' contains
detailed information about the New Bonds. Below is set forth supplemental
information that more specifically relates to the Series X Bonds. The following
supplemental information is qualified in its entirety by the information
appearing in the Prospectus, to which reference is made.
USE OF PROCEEDS
The net proceeds from the issue and sale of the Series X Bonds and the
Series Y Bonds being concurrently issued, plus the proceeds of short-term debt,
will be used to redeem $103,569,000 principal amount of bonds previously issued
by the Company. The bonds to be redeemed include four series of bonds with
maturities ranging from December 1, 1998 to December 1, 2018 and interest rates
ranging from 7.375% to 10.125%. The weighted average interest rate of all bonds
to be redeemed is 8.949%.
GENERAL
The Series X Bonds will be issued under a Supplemental Indenture dated as
of March 1, 1994 and will bear interest from the date of original issuance at
the rate of 6 1/4% per annum. Interest will be payable semi-annually in arrears
on March 1 and September 1 of each year, commencing September 1, 1994, to
registered owners as of the close of business on the February 15 or August 15
next preceding the interest payment dates, or if February 15 or August 15 falls
on a day on which banks are authorized to close in Boston, Massachusetts, then
as of the next preceding banking day.
The Series X Bonds will be issued initially under a book-entry only system
in the form of one fully registered certificate, registered in the name of Cede
& Co., as registered bondholder and nominee of The Depository Trust Company, New
York, New York. DTC will act as securities depository for the Series X Bonds. So
long as Cede & Co., as nominee of DTC, or any successor nominee of DTC, is the
registered bondholder of the Series X Bonds, references herein and in the
Prospectus to the bondholders or registered owners of Series X Bonds will mean
Cede & Co. or such successor nominee. See 'Book-Entry Only System' herein for
certain information regarding DTC and the book-entry only system.
See 'The Indenture and the Trustee' and 'General Terms of Bonds' under
'Description of the New Bonds' in the Prospectus.
REDEMPTION PROVISIONS OF THE SERIES X BONDS
The Series X Bonds will not be redeemable prior to maturity.
DIVIDEND RESTRICTIONS
The Supplemental Indenture under which the Series X Bonds will be issued
does not contain any provisions restricting the Company's ability to pay common
dividends; however, restrictions on the Company's ability to pay such dividends
remain in effect as a result of the issuance of prior series of bonds. See
'Description of the New Bonds -- Dividend Restrictions' in the Prospectus. Upon
the redemption of the Series T bonds with the proceeds of this offering, the
Twenty-sixth Supplemental Indenture, which contains restrictions applicable so
long as any Series G bonds are outstanding, will contain the most restrictive
provisions. Under that provision, unrestricted earned surplus at January 31,
1994 would have been $82,792,236.
S-3
<PAGE>
EARNINGS COVERAGE
The section of the Prospectus entitled 'Description of the New
Bonds -- Issuance of Additional Bonds; Earnings Coverages' sets forth
information about the earnings coverage provisions of the Company's Indenture
that must be satisfied for the Company to issue additional first mortgage bonds,
unless the issue is a certain type of refunding issue pursuant to SS3.04 of the
Indenture. Because the Company is issuing the Series X and Series Y Bonds
pursuant to SS3.04 in an aggregate principal amount equal to the aggregate
principal amount of bonds that have been previously redeemed or retired and the
total annual interest requirements of the Series X and Series Y Bonds do not
exceed the total annual interest requirements of the bonds that have been
previously redeemed or retired, the Company is not required to satisfy the
earnings coverage provisions of the Indenture to issue the Series X and Series Y
Bonds. However, if it were required to do so, the Company believes it could
satisfy the earnings coverage requirement (as defined in the Indenture), since
for the twelve months ended January 31, 1994, the earnings coverage ratio was
3.05 on the basis of bonds and prior lien obligations outstanding as of January
31, 1994 and assuming that the Series X and Series Y Bonds have also been
issued.
OTHER RESTRICTIONS UPON ISSUANCE OF DEBT
In addition to the foregoing restrictions, there are additional limitations
upon the creation and/or issuance by the Company of long-term debt securities.
Under certain bank and bank reimbursement agreements, lenders are not required
to make additional loans or the maturity of indebtedness can be accelerated if
the Company does not meet an equity ratio that requires, in effect, that the
Company's common equity (as defined) be at least 30 percent of its total
capitalization.
BOOK-ENTRY ONLY SYSTEM
The description which follows of the procedures and recordkeeping with
respect to beneficial ownership interests in the Series X Bonds, payments of
principal of, and premium, if any, and interest on, the Series X Bonds to DTC
and its Participants or Beneficial Owners, in each case as defined below,
confirmation and transfer of beneficial ownership interests in the Series X
Bonds and other related transactions by and among DTC, the DTC Participants and
Beneficial Owners is based solely on information furnished by DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a 'banking organization' within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a 'clearing corporation' within the
meaning of the New York Uniform Commercial Code, and a 'clearing agency'
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants (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 (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 (Indirect Participants). The rules applicable to DTC and
its Participants are on file with the Securities and Exchange Commission.
Purchases of Series X Bonds under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Series X Bonds on DTC's
records. The ownership interest of each actual purchaser of Series X Bonds
(Beneficial Owner) is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
S-4
<PAGE>
interests in the Series X Bonds 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 the
Series X Bonds, except in the event that use of the book-entry system for the
Series X Bonds is discontinued. SO LONG AS CEDE & CO., AS NOMINEE FOR DTC, IS
THE SOLE HOLDER OF THE SERIES X BONDS, THE TRUSTEE SHALL TREAT CEDE & CO. AS THE
ONLY HOLDER OF THE SERIES X BONDS FOR ALL PURPOSES UNDER THE INDENTURE,
INCLUDING RECEIPT OF ALL PRINCIPAL OF, AND PREMIUM, IF ANY, AND INTEREST ON SUCH
BONDS, RECEIPT OF NOTICES, AND VOTING AND REQUESTING OR DIRECTING THE TRUSTEE TO
TAKE OR NOT TO TAKE, OR CONSENTING TO, CERTAIN ACTIONS UNDER THE INDENTURE.
To facilitate subsequent transfers, all Series X Bonds deposited by
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Series X Bonds 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 Series X Bonds; DTC's records
reflect only the identify of the Direct Participants to whose accounts such
Series X Bonds 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, if any, shall be sent to Cede & Co. If less than all of
the Securities 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.
Neither DTC nor Cede & Co. will consent or vote with respect to the Series
X Bonds. 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 Series X Bonds are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Principal of, and premium, if any, and interest payments on the Series X
Bonds will be made to DTC. DTC's practice is to credit Direct Participants'
accounts on the applicable payment 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 such 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 the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal, and premium, if any, and interest to DTC is the responsibility of the
Company or the Trustee, 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 depository with
respect to the Series X Bonds at any time by giving reasonable notice to the
Company or the Trustee. Under such circumstances, in the event that a successor
securities depository is not obtained, individual bond certificates are required
to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
individual bond certificates will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable
(including DTC), but the Company takes no responsibility for the accuracy
thereof.
S-5
<PAGE>
THE COMPANY, THE UNDERWRITER AND THE TRUSTEE HAVE NO RESPONSIBILITY OR
OBLIGATION TO THE DTC PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO (A)
THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DTC PARTICIPANT, (B) THE
PAYMENT BY ANY DTC PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN
RESPECT OF THE PRINCIPAL OF, AND PREMIUM, IF ANY, AND INTEREST ON, THE SERIES X
BONDS; (C) THE DELIVERY OR TIMELINESS OF DELIVERY BY DTC TO ANY DTC PARTICIPANT
OR BY ANY DTC PARTICIPANT TO ANY BENEFICIAL OWNER OF ANY NOTICE WHICH IS
REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURE TO BE GIVEN TO HOLDERS OF
THE SERIES X BONDS; OR (D) ANY OTHER ACTION TAKEN BY DTC, OR ITS NOMINEE, CEDE &
CO., AS HOLDER OF THE SERIES X BONDS.
UNDERWRITER
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof, Morgan Stanley & Co. Incorporated (the
Underwriter) has agreed to purchase from the Company, and the Company has agreed
to sell to the Underwriter, $40,000,000 principal amount of the Series X Bonds.
The Underwriting Agreement provides that the obligation of the Underwriter to
pay for and accept delivery of the Series X Bonds is subject to the approval of
certain legal matters by its counsel and to certain other conditions. The
Underwriter is committed to take and pay for all of the Series X Bonds if any
are taken.
The Underwriter initially proposes to offer part of the Series X Bonds
directly to the public at the public offering price set forth on the cover page
of this Prospectus Supplement and part to certain dealers at a price that
represents a concession not in excess of .200% of the principal amount of the
Series X Bonds. The Underwriter may allow, and such dealers may reallow, a
concession not in excess of .125% of the principal amount of the Series X Bonds
to certain other dealers. All sales to dealers will be made pursuant to dealer
agreements. After the initial public offering, the public offering price and
concessions may be changed.
The Series X Bonds are a new issue of securities with no established
trading market. The Company has been advised by the Underwriter that it intends
to make a market in the Series X Bonds but that it is not obligated to do so and
may discontinue such market making at any time without notice. Accordingly, no
assurance can be given as to the liquidity of the trading market for the Series
X Bonds.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including certain liabilities under the Securities Act of 1933, as
amended.
S-6
<PAGE>
PROSPECTUS
WESTERN MASSACHUSETTS ELECTRIC COMPANY
FIRST MORTGAGE BONDS
CLASS A PREFERRED STOCK, $25 PAR VALUE
------------------------------
This prospectus (the Prospectus) is to be used by Western Massachusetts
Electric Company (the Company) in connection with the issuance and sale at one
time or from time to time of First Mortgage Bonds (the New Bonds) and/or Class A
Preferred Stock, $25 par value (the New Preferred Stock). The New Bonds and the
New Preferred Stock are referred to herein as the New Securities. The principal
amount and par value of all New Securities to be issued under this Prospectus in
the aggregate shall not exceed $170,000,000. For each series of New Securities
with respect to which this Prospectus is being delivered, a supplement to this
Prospectus (the Prospectus Supplement) will set forth (i) in the case of the New
Bonds, the principal amount of such series, the series designation, the purchase
price, the public offering price, the interest rate, the maturity date, and any
redemption or sinking fund terms which differ from the descriptions of such
terms in this Prospectus and (ii) in the case of New Preferred Stock, the
specific number of shares of New Preferred Stock, the purchase price, the
initial public offering price, the dividend rate (or method of calculation
thereof) and any redemption or sinking fund terms which differ from the
descriptions of such terms in this Prospectus.
The Prospectus Supplement will also set forth the names of the underwriters
or other initial purchasers of such series of New Securities, any applicable
underwriters' discounts, allowances and commissions, if applicable, the net
proceeds to the Company from any such sale and other specific terms of such
series. See 'Plan of Distribution' for possible indemnification arrangements for
underwriters and purchasers.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS DECEMBER 17, 1993
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED, OR INCORPORATED BY REFERENCE, IN THIS PROSPECTUS
IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS 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.
------------------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the 1934 Act) and, in accordance therewith, files reports
and other information with the Securities and Exchange Commission (the SEC).
Such reports and other information can be inspected and copied at the public
reference facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 and Seven World Trade Center, New York, New York 10007. Copies of
such material can also be obtained at prescribed rates from the Public Reference
Section of the SEC at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549.
------------------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1992, its Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993,
June 30, 1993 and September 30, 1993, and its Current Reports on Form 8-K dated
June 3, 1993, June 30, 1993 and September 10, 1993 (File No. 0-7624) have been
filed with the SEC pursuant to the 1934 Act and are hereby incorporated in this
Prospectus by reference.
All documents filed by the Company pursuant to Sections 13(a) and (c), 14
or 15(d) of the 1934 Act after the date of this Prospectus and prior to the
termination of this offering 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. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus and any amendment or supplement hereto to the
extent that a statement contained herein or in any other subsequently filed
document, which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus or any such amendment or supplement.
Certain information contained in this Prospectus summarizes, is based upon,
or refers to, information and financial statements contained in one or more
incorporated documents; accordingly, such information contained herein is
qualified in its entirety by reference to such documents and should be read in
conjunction therewith.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, on the request of any such person, a copy of
any or all of the documents referred to above which have been or may be
incorporated in this Prospectus by reference, other than exhibits to such
documents. Written requests should be directed to Western Massachusetts Electric
Company, P.O. Box 270, Hartford, Connecticut 06141-0270, Attention: Investor
Relations. Telephone requests should be made to (203) 665-5000, Attention:
Investor Relations.
2
<PAGE>
IN CONNECTION WITH ANY FIRM COMMITMENT OFFERING MADE PURSUANT TO THIS
PROSPECTUS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH
STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY OR ANY
BONDS OR PREFERRED STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
THE COMPANY
The Company is a wholly-owned subsidiary of Northeast Utilities (NU). The
four wholly-owned operating subsidiaries of NU -- the Company, The Connecticut
Light and Power Company, Public Service Company of New Hampshire and Holyoke
Water Power Company -- furnish electric service in portions of Connecticut and
New Hampshire and in western Massachusetts. The Company is a Massachusetts
corporation, organized in 1886, and is qualified as a foreign corporation in
Connecticut. The Company is an electric utility engaged principally in the
production, purchase, transmission, distribution and sale of electricity at
retail for residential, commercial, industrial and municipal purposes within the
Commonwealth of Massachusetts.
The principal executive offices of the Company are located at 174 Brush
Hill Avenue, West Springfield, Massachusetts 01089 (telephone (413) 785-5871).
USE OF PROCEEDS
The net proceeds from the issue and sale of the New Securities will be used
to refund, either through redemptions or open market purchases, outstanding
first mortgage bonds bearing relatively high interest rates and preferred stock
bearing relatively high dividend rates (collectively, the High Cost Securities)
or to refinance maturing debt and/or to fund sinking funds. The Company will
calculate a breakeven rate for each series of High Cost Securities, which is a
discount rate that equates the present value of the cash flow associated with
the new series of bonds (inclusive of call premiums and new issue expenses) to
the present value of the cash flow associated with the issue being redeemed
(assuming comparable maturities or average lives). The Company will not enter
into a proposed refunding transaction unless the breakeven rate for a series of
bonds or preferred stock to be refunded exceeds the then-current market rate for
New Bonds or New Preferred Stock of similar amount and maturity or average life.
The outstanding series of the Company's securities that may, depending on
prevailing interest rates, be considered High Cost Securities and therefore
candidates for redemption or purchase with the net proceeds from the issue and
sale of the New Securities include First Mortgage Bonds with interest rates
ranging from 5.75% to 10.125% and maturities ranging from March 1, 1997 to
December 1, 2018 and series of Preferred Stock with dividend rates ranging from
7.60% to 7.72% and average lives ranging from 18 years to perpetual. Since a
series of High Cost Securities may be refunded prior to the issuance of a series
of New Securities, short-term debt may be temporarily used to finance the
refunding or redemption and the proceeds from the issue and sale of the New
Securities would be used to repay this short-term debt.
If a series of the New Securities is sold in advance of the maturity date
of the Company's short-term borrowings or the refunding of High Cost Securities,
the Company may temporarily invest the net proceeds from the sale of the New
Securities in the NU system money pool. The NU system money pool was established
by certain subsidiaries of NU, including the Company, to provide a more
efficient use of the cash resources of the system and to reduce outside
short-term borrowings. Short-term borrowing needs of member companies are first
met with available funds of other member companies and funds may be withdrawn or
repaid to the pool at any time without prior notice. Investing and borrowing
subsidiaries receive or pay interest based on the average daily Federal Fund
rate, except that borrowings based on loans from NU bear interest at NU's cost.
3
<PAGE>
DESCRIPTION OF THE NEW BONDS
THE INDENTURE AND THE TRUSTEE
Each series of the New Bonds is to be issued under and secured by the First
Mortgage Indenture and Deed of Trust dated as of August 1, 1954 between the
Company and The First National Bank of Boston, Massachusetts, Successor Trustee
(the Trustee) (hereinafter referred to as the Original Indenture) and indentures
supplemental thereto, including one or more supplemental indentures, each of
which would relate to a series of the New Bonds (each of which is hereinafter
referred to as a New Supplemental Indenture). Copies of the Original Indenture
and of the Sixteenth, Twenty-fourth, Twenty-sixth, Twenty-eighth, Thirtieth,
Thirty-third, Thirty-seventh, Forty-third, Fifty-eighth, Sixtieth, Sixty-third,
Sixty-fifth, Sixty-seventh, Seventy-first and Seventy-second Supplemental
Indentures and the form of the New Supplemental Indenture (herein collectively
referred to as the Indenture) have been filed as exhibits to, or incorporated by
reference in, the registration statement of which this Prospectus is a part (the
Registration Statement). The summary description of the provisions of the
Indenture which follows does not purport to be complete or to cover all the
provisions thereof; however, all material terms of the New Bonds are described
herein or, with respect to specific terms of each series of New Bonds, will be
described more fully in the prospectus supplement relating to such series. The
following summary is qualified in its entirety by express reference to the
provisions of the Indenture and by reference also to the definitions contained
therein, under which many of the terms used have restrictive meanings. Article
and section references herein are to provisions of the Original Indenture as
heretofore amended unless otherwise indicated.
The Trustee acts as a depository bank of, makes loans to, and performs
other services for the Company and other companies in the NU system in the
ordinary course of business.
GENERAL TERMS OF BONDS
Each series of New Bonds will mature on the date provided for such series,
and will bear interest from the date of original issuance at the rate per annum
shown in the series title. Interest will be payable semiannually at the
principal corporate trust office of the Trustee in Boston, Massachusetts, to
registered owners at the close of business on the record date set for each
series, or if a legal holiday or a day on which banks are authorized to close in
Boston, Massachusetts, on the next preceding banking day. The Prospectus
Supplement with respect to each series of New Bonds will set forth the maturity
date, interest rate, interest payment dates and record dates for such series.
The New Bonds are to be issued only in the form of fully registered bonds
without coupons in denominations of $1,000 or multiples thereof and may be
presented for exchange for a like aggregate principal amount of the same series
of New Bonds of other authorized denominations and for transfer at the principal
corporate trust office of the Trustee in Boston, Massachusetts, without payment
in either case of any charge other than for any tax or other governmental
charges required to be paid by the Company.
The Indenture does not contain any covenants or other provisions that are
specifically intended to afford holders of the New Bonds special protection in
the event of a highly leveraged transaction.
SECURITY AND PRIORITY
In the opinion of counsel for the Company, the Indenture constitutes a
first mortgage (except for encumbrances stated in the granting clauses thereof,
of Schedule A thereto and Permitted Encumbrances) on all property now owned by
the Company (other than certain property hereinafter referred to) and on all the
rents, earnings and income thereof, but prior to a default the Company may
retain possession of the mortgaged property and take the rents, earnings and
income thereof. Certain property is specifically excepted in the granting
clauses of the Indenture, consisting principally of the following: cash,
receivables, contracts, securities, legal claims and claims for tax refunds;
office furniture and equipment; vehicles and their related equipment; materials,
merchandise and supplies held for sale in the ordinary conduct of business;
materials and supplies, fuel and other personal property which are consumable
(otherwise than by ordinary wear and tear) in the operation of the plants and
systems of
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the Company; materials or supplies used as components in the construction of
electric utility or steam plant and held in advance of use thereof for such
purpose; the last day of the term of any lease; all property, leasehold
interests, permits, licenses, franchises and rights which may not legally be
subjected to the lien of the Indenture or which cannot be so subjected without
the consent of other parties whose consent is not secured; and all small tools
and equipment and machinery of portable size. The property so subject to the
lien of the Indenture includes the Company's interest in all the physical
properties referred to under 'Item 2. Properties' in the Company's Annual Report
on Form 10-K for 1992 except the Cobble Mountain Plant and the generating plants
of the four regional nuclear generating companies. The Indenture contains
after-acquired property clauses which, in the opinion of counsel for the
Company, will be effective as to the personal property covered thereby when
acquired by the Company. Insofar as such clauses apply to after-acquired real
property they may, in the opinion of counsel, be effective only upon the filing
and recording of a supplemental indenture in respect of any such real property.
(The granting clause, SS1.02 and Article VII.)
Under certain limited circumstances, the lien of the Indenture could be
subordinated to a lien in favor of the Commonwealth of Massachusetts pursuant to
the Massachusetts Oil and Hazardous Materials Release Prevention and Response
Act, commonly known as the Massachusetts Superfund. This law creates a lien
effective against all real and personal property of the site owner in favor of
the Commonwealth of Massachusetts for up to three times the Commonwealth's cost
incurred for cleaning up a hazardous waste site. The law also contains a
so-called 'super-lien' provision under which the statutory lien is superior to
all other encumbrances, both existing and future, on the site of release of the
hazardous waste.
Also, under certain limited circumstances, the lien of the Indenture on
real property in Connecticut acquired by the Company after June 3, 1985, could
be subordinated to a lien in favor of the State of Connecticut pursuant to a
Connecticut law (Connecticut General Statutes section 22a-452a) providing for
such a lien for reimbursement for expenses incurred in containing, removing or
mitigating hazardous waste. The principal real property interests owned by the
Company in Connecticut are the Company's joint ownership interests in the
Millstone nuclear electric generating units, substantially all of which were
acquired before June 3, 1985.
Each series of the New Bonds will rank equally as to security with the
bonds now outstanding, and any additional bonds of other series issued, under
the Indenture as from time to time supplemented, and will have priority as to
mortgage security over any other debt of the Company, except for debt secured by
Permitted Encumbrances, and except for debt secured by liens of after acquired
property existing at the time of acquisition thereof or created
contemporaneously to secure or raise a part of the purchase price thereof which
debt under the Indenture may not exceed 60% of the Cost or Fair Value of such
property, whichever is less. (SSSS4.09 and 4.10.)
REDEMPTION PROVISIONS
The redemption terms for each series of the New Bonds will be set forth in
the New Supplemental Indenture and the Prospectus Supplement with respect to
such series.
ISSUANCE OF ADDITIONAL BONDS; EARNINGS COVERAGES
The aggregate principal amount of bonds which may be issued under the
Indenture is not limited by its terms. Additional bonds may be issued under the
Indenture (a) to the extent of 60% of the lesser of the Cost or Fair Value (at
date of acquisition) of Available Net Property Additions (SS3.08), (b) against
the deposit of cash equal to the principal amount of bonds to be issued
(SS3.05), and (c) to refund other bonds theretofore outstanding under the
Indenture (SS3.04). Such additional bonds, however, may be issued under SSSS3.05
and 3.08 and in the case of certain refundings under SS3.04 only if the net
earnings as defined have been at least twice the annual interest charges on all
bonds outstanding, including the additional bonds applied for but excluding
bonds to be redeemed from the proceeds of such additional bonds, and all prior
lien obligations. On the basis of this formula, after giving effect to the
issuance of $65,000,000 of New Bonds at an assumed rate of 7.50%, $55,000,000 of
New Bonds at an assumed rate of 6.25% and $15,000,000 of New Bonds at an assumed
rate of 5.00%, in which the net
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proceeds are used to refund outstanding First Mortgage Bonds having a breakeven
rate of 5.09% or above, the earnings coverage ratio for the twelve month period
ending September 30, 1993 would be 2.75.
As of September 30, 1993, the Available Net Property Additions (SS3.08)
against which additional bonds might be issued was approximately $127,106,627,
sufficient to permit the issue of approximately $76,263,976 aggregate principal
amount of additional bonds. The aggregate amount of First Mortgage Bonds
outstanding on September 30, 1993 was $309,235,000.
Money received by the Trustee upon the issue of additional bonds against
cash may be withdrawn by the Company, while not in default, in amounts equal to
60% of Available Net Property Additions based on the Cost or Fair Value to the
Company at the date of acquisition, whichever is less, and if not so withdrawn
within three years, shall be applied by the Trustee to the redemption of bonds
of the series in respect of the issue of which it was deposited. (SSSS1.02,
1.03, 3.06 and 3.07.)
IMPROVEMENT FUND
The terms of the Improvement Fund, if any, for each series of the New Bonds
will be set forth in the New Supplemental Indenture and the Prospectus
Supplement with respect to such series.
MAINTENANCE OF PROPERTY
The Indenture contains a general maintenance covenant. The Company is
required by the Indenture in each fiscal year to charge to current earnings and
to credit to a depreciation reserve an amount not less than 2.1% of the average
of the beginning and ending balances for such year of the total plant and
equipment devoted to utility operation of the Company, exclusive of
undepreciable real estate and rights therein and of unfinished construction.
Inspection by an engineer is required annually, and the Company covenants that
it will make good any maintenance deficiency and record retirements as called
for by the engineer's certificate. (SSSS4.06 and 4.12 of the Original Indenture
and SS7.02 of the First Supplemental Indenture.)
REPLACEMENT FUND
The Indenture contains a Replacement Fund Requirement effective January 1,
1967, pursuant to which the Company is required to make, in each calendar year,
expenditures for Property Additions in an amount equal to 2.25% of the average
of the amounts of its Depreciable Property at the beginning and end of the year
and, if it fails so to do, to make up such deficiency on or before May 1 of the
ensuing calendar year by (a) depositing cash with the Trustee, or (b) depositing
outstanding bonds with the Trustee at 100% of the principal amount thereof, or
(c) allocating Available Net Property Additions in an amount equal to 100%
thereof. Any cash or bonds so deposited may be withdrawn and any Available Net
Property Additions so allocated may be reinstated, to the extent that any such
deficiency is made up during an ensuing calendar year. (SSSS1.02(30) and 4.17 of
the Original Indenture as supplemented by Article VII(d) and (i) of the
Twenty-fourth Supplemental Indenture.) The Replacement Fund credit at December
31, 1992 was $836,203,457.
DIVIDEND RESTRICTIONS
The Indenture contains restrictions on the payment of dividends, which were
included in Supplemental Indentures at the time of the issuance of prior series
of bonds. If a dividend restriction is included for any series of the New Bonds,
the specific terms will be described in the Prospectus Supplement for that
series. The Sixty-fifth Supplemental Indenture, which contains restrictions
applicable so long as any Series T bonds are outstanding, currently contains the
most restrictive provision. Under this provision, the aggregate amount which may
be declared, paid or otherwise applied by the Company after December 1, 1988 as
dividends or other distributions on its common stock (other than by way of stock
dividends or when an equal amount of cash is received concurrently as a capital
contribution or on the sale of common stock) or on the purchase or other
acquisition of common stock may not exceed (i) retained earnings accumulated
after November 30, 1988, plus (ii) $40,000,000, plus (iii) such further amount
as may be authorized by the SEC under the Public Utility Holding Company Act of
1935, less (iv) preferred dividends, but not common dividends, accrued
subsequent to November
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30, 1988, and also less (v) the amount, if any, by which the Replacement Fund
Requirement exceeds depreciation charges to income or retained earnings.
Pursuant to those provisions, unrestricted retained earnings at September 30,
1993 amounted to approximately $94,337,596. Similar but less restrictive
dividend limitations are applicable so long as other series of bonds remain
outstanding.
DEFAULT
The Indenture provides that the following events will constitute 'events of
default' thereunder: failure to pay principal; failure for 30 days to pay
interest; failure for 60 days to make any payment in respect of the Improvement
Fund or Replacement Fund; failure to perform any of the other Indenture
covenants for 60 days after notice to the Company; and certain events in
bankruptcy, insolvency or receivership (SS9.01). The Indenture requires the
Company to deliver to the Trustee an annual officers' certificate as to
compliance by the Company with its covenants under the Indenture (SS4.15).
The Indenture provides that the holders of a majority in principal amount
of the bonds outstanding may direct the time, method and place of conducting any
proceedings for the enforcement of the Indenture; provided, however, that the
Trustee shall have the right to decline to follow any such direction if it shall
be advised by counsel that the action or proceeding so directed may not lawfully
be taken or if the Trustee is not sufficiently indemnified for any expenditures
in any action or proceeding so directed (SS9.16).
MODIFICATION OR AMENDMENT OF THE INDENTURE
The Indenture may be modified or amended, without the consent of the
bondholders, to add restrictions on the issue of additional bonds or additional
covenants by the Company, to convey additional property to the Trustee or
correct or amplify the description of the mortgaged property; to correct
ambiguities, defects or inconsistencies in the Indenture; or to provide for
separate or co-Trustees or for meetings of bondholders. The Indenture may be
modified or amended in any respect on 30 days' notice published and sent postage
prepaid to registered owners of bonds and with the written consent of holders of
at least 70% in principal amount of all bonds issued under the Indenture then
outstanding; provided that, among other things, no such modification or
amendment shall permit any change in the principal amount or premium, any
extension of the maturity, or reduction of the rate, or extension of the time of
payment for interest, or in any way affect or impair the obligations of the
Company in respect of principal or interest on any bond issued under the
Indenture then outstanding without the written consent of the holder thereof, or
affect the rights of one or more series of bonds differently from other series
except upon the written consent of at least 70% in principal amount of the bonds
of each series so affected then outstanding, or permit the creation, except as
expressly authorized in the Indenture, of any mortgage or other lien prior to or
on a parity with the lien of the Indenture or change any of the percentages of
holders of bonds required for the taking of any action to modify or amend the
Indenture. (Article XVI.)
DESCRIPTION OF THE NEW PREFERRED STOCK
GENERAL
The Company's capital stock consists of shares of Common Stock, $25 par
value per share, as well as two classes of preferred stock, one designated
'Preferred Stock,' having a par value of $100 per share, and the other
designated 'Class A Preferred Stock,' having a par value of $25 per share. The
New Preferred Stock described in this Prospectus consists entirely of Class A
Preferred Stock, $25 par value. The Preferred Stock and the Class A Preferred
Stock are hereinafter sometimes collectively referred to as the Senior Stock.
Shares of the Preferred Stock and shares of Class A Preferred Stock rank on
a parity in respect of dividends or payment in case of liquidation, and, to the
extent not fixed and determined by the Company's by-laws or articles of
organization, have the same rights, preferences and powers. Voting rights are
the only differences in rights between the two classes and are summarized below
under 'Voting Rights.'
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The Class A Preferred Stock may be issued from time to time in series when
authorized by the Company's Board of Directors, up to the number of authorized
but unissued shares of Class A Preferred Stock set forth in the Company's
articles of organization, as amended from time to time. The series designation,
dividend rate (or method of determining the dividend rate), redemption prices
and other terms of each series are determined by the Board of Directors to the
extent not fixed by the Company's articles of organization and by-laws.
The general provisions of the Senior Stock, applicable to all series of
Preferred Stock and Class A Preferred Stock and the specific provisions
applicable to each series, including the New Preferred Stock, are set forth in
the by-laws and articles of organization. A copy of the Company's by-laws and
the capital stock provisions of the Company's articles of organization are filed
as exhibits to the Registration Statement of which this Prospectus is a part.
Article XVI of the by-laws contains the Company's capital stock provisions and
is substantially identical to the capital stock provisions of the articles of
organization; therefore, for convenience, all references herein are to
provisions of Article XVI of the by-laws.
The provisions of the Company's Senior Stock are summarized below. The
summary does not purport to be complete or to cover all the provisions thereof;
however, all material terms of the New Preferred Stock are described herein or,
with respect to specific terms of each series of New Preferred Stock, will be
described more fully in the prospectus supplement relating to such series.
Reference is made to aforementioned exhibits to the Registration Statement for a
complete statement of the Senior Stock provisions.
The New Preferred Stock will be transferable at the offices of Northeast
Utilities Service Company, Berlin, Connecticut, Transfer Agent and Registrar.
EARNINGS COVERAGE-SENIOR STOCK PROVISIONS
The Senior Stock provisions of the Company's by-laws and articles of
organization require for the issuance of additional Senior Stock that earnings
before income taxes be at least one and one-half times the pro forma annual
interest charges on all indebtedness and annual dividend requirements on the
Senior Stock to be outstanding after the issuance of the additional stock (see
'Voting Rights'). On the basis of this formula, if the Company were to issue $35
million of the New Preferred Stock at an assumed rate of 6.5% and apply those
proceeds, together with $14 million of short-term debt, to redeem all
outstanding Preferred Stock with a breakeven rate of 5.9% or higher ($47 million
aggregate par value), the earnings coverage ratio for the twelve month period
ending September 30, 1993 would be 2.12, based on the indebtedness and Preferred
Stock outstanding as of September 30, 1993, after giving effect to the
above-described adjustments.
DIVIDEND RIGHTS
Holders of Senior Stock of each class and series are entitled to receive
cumulative dividends when declared by the Board of Directors at the rate
provided for such class and series. Dividends may not be declared or paid on a
particular class and series of the Senior Stock unless dividends have been or
are contemporaneously declared or paid on the Senior Stock of all other classes
and series for all dividend periods terminating on the same or an earlier date.
No dividend may be paid on the Common Stock or other stock of the Company
subordinate to the Senior Stock in respect of dividends or assets (which
together with Common Stock is defined as 'junior stock') unless full cumulative
dividends to the last preceding dividend date have been paid or set apart for
payment of the Senior Stock (Sections 2A and 2B).
The Company is, in effect, prohibited from making payments on junior stock,
by way of dividends or otherwise (other than in shares of junior stock), in an
amount which, if the percentage of junior stock equity (as defined) to total
capitalization (as defined) is less than 20 percent, would, together with all
other junior stock payments made within the preceding 12 months, exceed 50% of
net income available for dividends on junior stock, or, if such percentage is
between 20% and 25%, would exceed 75% of such net income (Sections 2C, 2D and
2E).
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Dividends on each series of New Preferred Stock will be payable quarterly
at the rate provided for such series. If a series of the New Preferred Stock
were sold in December, 1993, dividends would be payable on the first days of
March, June, September and December in each year (the Dividend Payment Dates),
beginning on March 1, 1993. Dividends will be cumulative from the date of
issuance.
SINKING FUND PROVISIONS
If a sinking fund is provided for a particular series of New Preferred
Stock, the Prospectus Supplement will describe the terms of the sinking fund for
that series. See 'Redemption and Purchase' for limitations on the Company's
right to redeem or purchase Senior Stock if the Company is in arrears in the
payment of dividends on any outstanding shares of Senior Stock.
REDEMPTION AND PURCHASE
All or any part of any series of Senior Stock outstanding may be redeemed,
subject to certain limitations, at any time at the redemption price established
for such series, except that no redemption of less than all shares of Senior
Stock outstanding may be made if the Company is in arrears with respect to
payment of dividends on any shares of Senior Stock outstanding (Sections 3A
through 3D).
The Company may purchase any outstanding shares of Senior Stock upon the
best terms reasonably obtainable, but not exceeding the then-current redemption
price of such shares, except that no such purchase may be made if the Company is
in arrears with respect to payment of dividends on any shares of Senior Stock
outstanding or if any event of default exists under the Senior Stock provisions
(Section 3E).
Unless otherwise provided in the Prospectus Supplement, each series of the
New Preferred Stock will be redeemable for other than sinking fund purposes as a
whole or in part at any time, subject to the refunding provisions described
below, at the option of the Company upon at least 30 days' prior written notice
on the terms described in the Prospectus Supplement for that series.
None of the New Preferred Stock of any series shall be redeemed prior to a
date five years after the first day of the month in which the applicable series
is issued, if such redemption is for the purpose of or in anticipation of
refunding such New Preferred Stock through the use, directly or indirectly, of
borrowed funds or of the proceeds of the issue by the Company of shares of any
stock ranking prior to or on a parity with the New Preferred Stock as to
dividends or assets, if such borrowed funds or such shares have an effective
interest cost or effective dividend cost (computed in accordance with generally
accepted financial principles), as the case may be, of less than the effective
dividend cost of the applicable New Preferred Stock.
See the Prospectus Supplement for more information concerning the
redemption provisions with respect to any particular series of New Preferred
Stock.
LIQUIDATION RIGHTS
The Senior Stock is entitled to receive upon voluntary liquidation the
then-current redemption price for the particular series and, upon involuntary
liquidation, $100 per share in the case of the Preferred Stock and $25 per share
in the case of the Class A Preferred Stock, plus in each case all dividends
accrued and unpaid to the date of such payment, before any payment is made on
junior stock (Section 4).
VOTING RIGHTS
Except as otherwise provided by law, the Company's articles of organization
or the by-laws, holders of Senior Stock have no voting rights.
Unless a separate class vote is required by the articles of organization or
by-laws or by law, both classes of Senior Stock vote together as a single class,
with each share of the class of Preferred Stock and each share of the Class A
Preferred Stock having voting rights proportionate to their respective par
values. Accordingly, each share of Preferred Stock, $100 par value per share,
would have four times the
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voting rights of each share of Class A Preferred Stock, $25 par value per share.
Whenever the two classes have separate voting rights, each share of the
applicable class has one vote.
Whenever dividends on any share of Senior Stock are in arrears in an amount
equal to or exceeding four quarterly dividend payments or whenever there exists
a default in the performance of any of the Senior Stock provisions or a default
on which action has been taken by debentureholders, bondholders or the trustee
of any deed of trust or mortgage of the Company, or whenever the Company has
been declared bankrupt or a receiver of its property has been appointed, the
holders of Senior Stock have the right, voting together as a class, to elect the
smallest number of directors necessary to constitute a majority of the Board of
Directors (Section 5).
Without the affirmative vote of a majority in interest of the outstanding
shares of Senior Stock, the Company may not (Section 6A):
1. Issue or assume unsecured notes, debentures or other securities
representing unsecured debt (except to redeem all outstanding shares of
Senior Stock or to refund unsecured indebtedness) in excess of 20% of the
Company's outstanding capital stock, surplus and secured indebtedness, or,
with respect to unsecured indebtedness having maturities of less than 10
years, in excess of 10% of outstanding capital stock, surplus and secured
indebtedness. Payment due upon the maturity of unsecured debt having an
original single stated maturity of 10 years or more is not regarded as
unsecured debt with a maturity of less than 10 years until within three
years of the maturity thereof, and each of the payments due upon any
unsecured debt having an original stated maturity for the final serial
payment of 10 years or more is not regarded as an unsecured debt of a
maturity of less than 10 years until within three years of the maturity of
the final serial payment.
By the affirmative vote of the holders of a majority of the
outstanding shares of Preferred Stock at a stockholders' meeting held on
January 25, 1989, the Company has been authorized, notwithstanding such
limitations, to incur unsecured indebtedness, having maturities of less
than 10 years, in excess of 10% of its capital stock, surplus and secured
indebtedness, provided that (i) such indebtedness is issued on or before
March 31, 1994, (ii) such indebtedness has maturities not later than March
31, 1995, and (iii) the limitation on all unsecured indebtedness of the
Company to 20% of its capital stock, surplus and secured indebtedness is
complied with.
On December 15, 1993, a special meeting of holders of the Company's
Common Stock and Senior Stock (Special Meeting) is scheduled to be held for
the purpose of authorizing an amendment (Amendment) to the Company's
certificate of incorporation and by-laws relating to the limitation on
indebtedness described above. If approved, and assuming the receipt of any
necessary approval of the DPU to be obtained subsequent to the meeting, the
Amendment will eliminate the limitation on the incurrence or assumption of
unsecured indebtedness having maturities of less than ten years in excess
of 10% of capitalization, calculated as set forth above, but not in excess
of 20% of capitalization. In the event the Amendment is not approved by the
requisite vote of the holders of two-thirds of the shares of each class of
the Company's stock (Common Stock voting as one class and the Senior Stock
voting as a separate class), consideration will be given to a vote of the
holders of the Company's Senior Stock to extend the Company's current
five-year authorization to incur unsecured indebtedness above the 10%
restriction for an additional ten-year period ending on February 10, 2004.
Adoption of this proposal requires a majority vote of the shares of Senior
Stock. NU has advised the Company that it intends to vote all of the shares
of Common Stock of the Company, which constitute all such shares issued and
outstanding, in favor of the Amendment.
2. Issue, sell or otherwise dispose of any shares of then authorized
but unissued Senior Stock or any other stock ranking on a parity with or
having priority over the Senior Stock as to dividends or assets if (a) for
a period of 12 consecutive calendar months within the 15 calendar months
immediately preceding the month of issue, Income Before Interest Charges
(as defined) for said period available for the payment of interest
(including, in any case in which stock is to be issued in connection with
the acquisition of property, the Income Before Interest Charges of the
property to be acquired) was not at least one and one-half times the sum of
(i) the interest charges for one year on indebtedness then outstanding and
(ii) annual dividend requirements on shares of Senior Stock and stock
ranking on a parity with or having priority over the Senior Stock
outstanding and proposed to be issued, or (b) such issue would bring the
aggregate of the amount payable on
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involuntary liquidation of the Company with respect to all shares of Senior
Stock and all shares of stock ranking on a parity with or having priority
over the Senior Stock to an amount in excess of 'junior stock equity' (as
defined).
Without the affirmative vote of at least two-thirds of the outstanding
shares of Senior Stock, the Company may not:
1. Authorize any shares of any class of stock having priority over the
Senior Stock as to dividends or assets or issue any shares of any such
prior ranking stock more than 12 months after the date of the vote
authorizing such prior ranking stock (Section 6B).
2. Change the general terms, limitations and rights and preferences of
the Senior Stock, provided, however, that if any such change or proposed
change would affect only one class of Senior Stock, then such change may be
effected only by the affirmative vote or written consent of at least
two-thirds in interest of the outstanding shares of Common Stock and at
least two-thirds in interest of the outstanding shares of the class of
Senior Stock that is affected, voting or giving their consent in each case
separately as a class; and provided further that in no event may any
reduction of the dividend rate or of amounts payable on redemption or
liquidation with respect to any share of Senior Stock be made without the
consent of the holder thereof and that no such reduction with respect to
shares of any particular series of Senior Stock may be made without the
consent of all the holders of shares of such series (Section 6C).
The by-laws require the consent of a majority in interest of the
outstanding shares of the Senior Stock for a merger or consolidation of the
Company with or into any other corporation or for a sale of all or substantially
all of the Company's assets unless such merger, consolidation or sale or the
issuance or assumption of securities in the effectuation thereof shall have been
permitted under the Public Utility Holding Company Act of 1935 (Section 7).
MISCELLANEOUS
Except as otherwise expressly provided by law, the Senior Stock has no
preemptive or conversion rights and (except as provided with respect to a
particular series of either class of the Senior Stock) is not entitled to the
benefit of any sinking fund. See 'Sinking Fund Provisions.' Upon due issuance
and the receipt by the Company of the purchase price therefor, all shares of the
New Preferred Stock will be fully paid and nonassessable.
LEGAL OPINIONS AND EXPERTS
Legal matters in connection with the issue of the New Securities will be
passed upon for the Company by Robert P. Wax, Esq., Vice President, Secretary
and General Counsel of the Company, or Jeffrey C. Miller, Esq., Assistant
General Counsel of NUSCO. The legality of the New Securities will be passed upon
for the underwriters or other purchasers by Winthrop, Stimson, Putnam & Roberts,
One Battery Park Plaza, New York, New York.
Statements of law and legal conclusions herein and in the Registration
Statement pertaining to the description of the New Preferred Stock have been
reviewed by Mr. Miller. Certain statements of law and legal conclusions as
described in the Company's Annual Report on Form 10-K for 1992, its Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1993, June 30, 1993 and
September 30, 1993, and its Current Reports on Form 8-K dated June 3, 1993, June
30, 1993 and September 10, 1993 with respect to short-term borrowing authority
and the earnings coverage requirement of the Indenture and preferred stock
provisions of the Company, its franchises, its participation in joint projects,
the laws and regulations to which it is or may be subject, and litigation and
legal proceedings, have been reviewed by Mr. Miller and said statements are made
upon his authority as an expert.
The Company's audited financial statements and schedules related thereto,
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen & Co., independent public accountants, as indicated in their reports
with respect thereto, which have also been incorporated by reference herein, in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said reports.
11
<PAGE>
PLAN OF DISTRIBUTION
The Company will sell the New Securities in one or more sales, pursuant to
a negotiated underwriting or pursuant to the solicitation (through the giving of
notice to two or more potential purchasers) and acceptance of a proposal or
proposals for the purchase of all or any portion of the New Securities.
Purchasers of the New Securities may include underwriters or purchasers acting
for themselves. If underwriters are involved in the sale, the applicable series
of New Securities will be acquired by the underwriters for their own account and
may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at various prices
determined at the time of sale.
The Prospectus Supplement relating to a series of New Securities will set
forth the purchase price of New Securities of such series with respect to which
an agreement of sale has been entered into by the Company, the proceeds to the
Company from such sale, and the terms of any reoffering of New Securities,
including the names of any underwriters, the underwriters' discounts and
allowances, any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers. Any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers with
respect to New Securities may be changed from time to time. Unless otherwise set
forth in the Prospectus Supplement, the obligations of the underwriters or other
purchasers will be subject to certain conditions precedent and the underwriters
or other purchasers will be obligated to purchase all of the New Securities of
the applicable series if any of them are purchased, provided that under certain
circumstances involving a default of underwriters or other purchasers, less than
all of the New Securities of a series may be purchased.
The Company may indemnify any underwriter with respect to the New
Securities against certain liabilities, including liabilities under the
Securities Act of 1933.
RATIO OF EARNINGS TO FIXED CHARGES
Below are set forth the ratios of earnings to fixed charges for each of the
years in the period 1988 through 1992 and for the twelve months ended September
30, 1993. The ratios have been restated to reflect only the revenues and income
from the Company's continuing electric business. The Company divested its gas
business on June 30, 1989.
<TABLE>
<CAPTION>
TWELVE-MONTH
PERIOD ENDED RATIO
- ----------------------------------------------------------------------------- -----
<S> <C>
December 31, 1988............................................................ 2.32
December 31, 1989............................................................ 2.12
December 31, 1990............................................................ 2.00
December 31, 1991............................................................ 2.26
December 31, 1992............................................................ 2.43
September 30, 1993 (unaudited)............................................... 2.69
</TABLE>
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
Below are set forth the ratios of earnings to fixed charges and preferred
dividends for each of the years in the period 1988 through 1992 and for the
twelve months ended September 30, 1993. The ratios have been restated to reflect
only the revenues and income from the Company's continuing electric business.
The Company divested its gas business on June 30, 1989.
<TABLE>
<CAPTION>
TWELVE-MONTH
PERIOD ENDED RATIO
- ----------------------------------------------------------------------------- -----
<S> <C>
December 31, 1988............................................................ 1.76
December 31, 1989............................................................ 1.66
December 31, 1990............................................................ 1.57
December 31, 1991............................................................ 1.74
December 31, 1992............................................................ 1.88
September 30, 1993 (unaudited)............................................... 2.13
</TABLE>
12
<PAGE>
STATEMENT OF DIFFERENCES
The section symbol shall be expressed as 'SS'.
