<PAGE> 1
Filed Pursuant to
Rule 424(b)(4)
Registration No. 333-68783
PROSPECTUS SUPPLEMENT
(To Prospectus dated January 14, 1999)
$50,000,000
Wisconsin Gas Company
5 1/2% NOTES DUE 2009
------------------------
Interest payable on January 15 and July 15
------------------------
THE COMPANY MAY, AT ANY TIME, REDEEM THE NOTES, IN WHOLE OR
IN PART, AT THE REDEMPTION PRICES DESCRIBED HEREIN.
------------------------
PRICE 99.252% AND ACCRUED INTEREST, IF ANY
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE DISCOUNTS AND PROCEEDS TO
TO PUBLIC COMMISSIONS COMPANY
--------- ------------- -----------
<S> <C> <C> <C>
Per Note......................... 99.252% .650% 98.602%
Total............................ $49,626,000 $325,000 $49,301,000
</TABLE>
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Morgan Stanley & Co. Incorporated expects to deliver the notes to purchasers on
January 21, 1999.
------------------------
MORGAN STANLEY DEAN WITTER
ROBERT W. BAIRD & CO.
INCORPORATED
A.G. EDWARDS & SONS, INC.
January 15, 1999
<PAGE> 2
You should rely only on the information contained, or incorporated by
reference in, this prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus supplement and the accompanying prospectus. We are
offering to sell the Notes and seeking offers to buy the Notes only in
jurisdictions where offers and sales are permitted. The information contained or
incorporated by reference in this prospectus supplement and the accompanying
prospectus is accurate only as of the dates of this prospectus supplement and
the accompanying prospectus, regardless of the time of delivery of this
prospectus supplement and the accompanying prospectus or any sale of the Notes.
In this prospectus supplement and the accompanying prospectus, the "Company,"
"we," "us" and "our" refer to Wisconsin Gas Company.
------------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Forward Looking Statements.................................. S-3
Use of Proceeds............................................. S-3
Description of the Notes.................................... S-4
Underwriting................................................ S-8
PROSPECTUS
Where You Can Find More Information......................... 3
The Company................................................. 3
Use of Proceeds............................................. 4
Ratios of Earnings to Fixed Charges......................... 4
Description of the Notes.................................... 4
Plan of Distribution........................................ 13
Legal Matters............................................... 13
Experts..................................................... 14
</TABLE>
------------------------
S-2
<PAGE> 3
FORWARD-LOOKING STATEMENTS
Statements made in this prospectus supplement, the accompanying prospectus
or in the documents incorporated by reference in this prospectus supplement or
the prospectus that are not statements of historical fact are forward-looking
statements. Such statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from current expectations. These
factors include but are not limited to the risks and uncertainties listed below.
All of these factors are difficult to predict and generally are beyond
management's control.
- The impact of warmer- or colder-than-normal weather on the energy
business;
- Economic conditions, including the availability of individual
discretionary income and changes in interest rates;
- Changes in natural gas prices and supply availability;
- Increased competition in deregulated energy markets;
- The pace and extent of energy industry deregulation;
- Regulatory, governmental and judicial decisions;
- Increases in costs to clean up environmental contamination;
- Our ability to increase rates;
- Market demand for our products and services; and
- Unanticipated expenses or outcomes associated with year 2000 date
conversion.
USE OF PROCEEDS
The net proceeds from the sale of the Notes (estimated to be $49,200,000,
after deduction of underwriting discounts and commissions and expenses payable
by the Company) will be used to repay commercial paper borrowings used to retire
at maturity the entire $40,000,000 aggregate principal amount of our 7 1/2%
Notes due 1998. The 7 1/2% Notes were retired on November 16, 1998. As of
January 15, 1999, the average weighted interest rate on the short-term debt to
be repaid was 5.19%. The remainder of the net proceeds will be used for working
capital and other general corporate purposes. Pending the application of the net
proceeds, we expect to invest such proceeds in short-term interest-bearing
instruments or other investment-grade securities.
S-3
<PAGE> 4
DESCRIPTION OF THE NOTES
This description of the particular terms of the Notes supplements and
should be read in conjunction with the statements under "Description of the
Notes" in the accompanying prospectus. Additionally, the statements regarding
certain provisions of the Notes and the indenture under which the Notes will be
issued are summaries and do not purport to be complete.
GENERAL
The Notes will be issued under an indenture, dated as of September 1, 1990,
between us and Firstar Bank Milwaukee, N.A., as trustee.
The Notes will be unsecured obligations and will mature on January 15,
2009. The Notes will bear interest at the rate of 5 1/2% per annum. Interest on
the Notes will accrue from January 21, 1999 or from the most recent date to
which interest has been paid or duly provided for. Interest on the Notes will be
payable semi-annually on January 15 and July 15 of each year, commencing on July
15, 1999. Interest on each Note will be payable to the person in whose name the
Note (or any predecessor Note) is registered at the close of business on the
January 1 or July 1, as the case may be, immediately preceding an interest
payment date. Interest on the Notes will be computed on the basis of a 360-day
year of twelve 30-day months. The Notes are not entitled to the benefit of any
sinking fund. Principal of and interest on the Notes will be payable in
Milwaukee, Wisconsin.
If any interest payment date, redemption date or maturity date of the Notes
is not a business day in Milwaukee, Wisconsin, then the payment of principal,
premium, if any, and interest may not be made on such date but may instead be
made on the next business day. No interest will accrue on any amount payable on
an interest payment date, redemption date or maturity date after such interest
payment date, redemption date or maturity date, as the case may be.
REDEMPTION AT THE OPTION OF THE COMPANY
The Notes will be redeemable, in whole or in part, at our option, on any
date at a redemption price equal to the greater of (a) 100% of the principal
amount of the Notes to be redeemed or (b) the sum of the present values of the
remaining scheduled payments of principal and interest on the Notes (exclusive
of interest accrued to such redemption date) discounted to such redemption date
on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 10 basis points, plus accrued and unpaid
interest on the principal amount being redeemed to such redemption date;
provided, however, that installments of interest on Notes that are due and
payable on an interest payment date falling on or prior to the relevant
redemption date will be payable to the holders of such Notes, registered as such
at the close of business on the relevant record date according to their terms
and the provisions of the indenture.
"Treasury Rate" means, with respect to any redemption date for the Notes,
(a) the yield, under the heading that represents the average for the immediately
preceding week, appearing in the most recently published statistical release
designated "H.15(519)" or any successor publication that is published weekly by
the Board of Governors of the Federal Reserve System and that establishes yields
on actively traded United States Treasury securities adjusted to constant
maturity under the caption "Treasury Constant Maturities," for the maturity
corresponding to the Comparable Treasury Issue (if no maturity is within
S-4
<PAGE> 5
three months before or after the maturity date, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue shall be
determined and the Treasury Rate shall be interpolated or extrapolated from such
yields on a straight-line basis, rounding to the nearest month) or (b) if such
release (or any successor release) is not published during the week preceding
the calculation date or does not contain such yields, the rate per annum equal
to the semi-annual equivalent yield to maturity of the Comparable Treasury
Issue, calculated using a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date. The Treasury Rate shall be calculated on the third
business day preceding the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Independent Investment Banker as having a maturity comparable to
the remaining term of the Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the Notes.
"Independent Investment Banker" means Morgan Stanley & Co. Incorporated or,
if such firm is unwilling or unable to select the Comparable Treasury Issue, an
independent investment banking institution of national standing appointed by the
trustee after consultation with us.
"Comparable Treasury Price" means, with respect to any redemption date, (a)
the average of four Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (b) if the trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealer" means (1) Morgan Stanley & Co. Incorporated and
its respective successors; provided, however, that if Morgan Stanley & Co.
Incorporated shall cease to be a primary U.S. Government securities dealer in
New York City (a "Primary Treasury Dealer"), we will substitute another Primary
Treasury Dealer, and (2) any three other Primary Treasury Dealers selected by
us.
"Reference Treasury Dealer Quotation" means, with respect to the Reference
Treasury Dealer and any redemption date, the average, as determined by the
trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third business day preceding such redemption date.
We will mail notice of any redemption at least 30 days but not more than 60
days before any redemption date to each holder of Notes to be redeemed. If we
choose to redeem less than all the Notes, the trustee will select, in such
manner as it deems fair and appropriate, the Notes of such series to be redeemed
in whole or in part.
Unless we default in payment of the redemption price, on and after any
redemption date interest will cease to accrue on the Notes or portion thereof
called for redemption.
S-5
<PAGE> 6
PERMANENT GLOBAL SECURITIES
The Notes will be represented by one or more global securities registered
in the name of The Depository Trust Company, as Depositary (the "Depositary"),
or a nominee (we will refer to the Notes represented by such global note
security as a "book-entry note security"). Each global note security
representing book-entry note securities will be deposited with, or on behalf of,
the Depositary, and registered in the name of the Depositary or a nominee of the
Depositary.
The Depositary has indicated it intends to follow the following procedures
with respect to book-entry note securities.
Ownership of beneficial interests in book-entry note securities will be
limited to persons that have accounts with the Depositary for the related global
note security ("participants") or persons that may hold interests through
participants. Upon the issuance of a global note security, the Depositary will
credit, on its book-entry registration and transfer system, the participants'
accounts with the respective principal amounts of the book-entry note securities
represented by such global note security beneficially owned by such
participants. The accounts to be credited will be designated by any dealers,
underwriters or agents participating in the distribution of the book-entry note
securities. Ownership of book-entry note securities will be shown on, and the
transfer of such ownership interests will be effected only through, records
maintained by the Depositary for the related global note security (with respect
to interests of participants) and on the records of participants (with respect
to interests of persons holding through participants). The laws of some states
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. These laws may impair the ability to own,
transfer or pledge beneficial interests in book-entry note securities.
So long as the Depositary for a global note security, or its nominee, is
the registered owner of that global note security, the Depositary or its
nominee, as the case may be, will be considered the sole owner or holder of the
book-entry note securities represented by such global note security for all
purposes under the indenture. Except as described below, beneficial owners of
book-entry note securities will not be entitled to receive physical delivery of
a certificate in definitive form representing Notes and will not be considered
the owners or holders of Notes under the indenture. Accordingly, each person
beneficially owning book-entry note securities must rely on the procedures of
the Depositary for the related global note security and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interest, to exercise any rights of a holder under the indenture. We
understand, however, that under existing industry practice, the Depositary will
authorize the persons on whose behalf it holds a global note security to
exercise certain rights of holders of Notes.
We will make payments of principal of, and premium and interest on,
book-entry note securities to the Depositary or its nominee, as the case may be,
as the registered holder of the related global note security. Wisconsin Gas
Company, the trustee and any other agent of ours or agent of the trustee will
not have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in a global
note security or for maintaining, supervising or reviewing any records relating
to beneficial ownership interests.
We expect that the Depositary, upon receipt of any payment of principal of,
or premium or interest on a global note security, will immediately credit
participants'
S-6
<PAGE> 7
accounts with payments in amounts proportionate to the respective amounts of
book-entry note securities held by each participant as shown on the records of
such Depositary. We also expect that payments by participants to owners of
beneficial interests in book-entry note securities held through those
participants will be governed by standing customer instructions and customary
practices, as is now the case with the securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of those participants.
We will issue certificated Notes in exchange for each global note security
if the Depositary is at any time unwilling or unable to continue as Depositary
or ceases to be a registered clearing agency and a successor Depositary
registered as a clearing agency is not appointed. In addition, we may at any
time and in our sole discretion determine not to have the book-entry note
securities of the Notes represented by one or more global note securities and,
in that event, will issue certificated Notes in exchange for the global note
securities of the Notes. Global note securities will also be exchangeable by the
holders for certificated Notes if an event of default with respect to the
book-entry note securities represented by those global Notes has occurred and is
continuing. Any certificated Notes issued in exchange for a global note security
will be registered in such name or names as the Depositary shall instruct the
trustee. We expect that such instructions will be based upon directions received
by the Depositary from participants with respect to ownership of book-entry
Notes relating to such global note security.
The Depositary has further advised us that the Depositary's management is
aware that some computer applications, systems, and the like for processing data
that are dependent upon calendar dates, including dates before, on, and after
January 1, 2000, may encounter "Year 2000 problems." The Depositary has informed
its participants and other members of the financial community that it has
developed and is implementing a program so that its systems, as the same relate
to the timely payment of distributions (including principal and interest
payments) to securityholders, book-entry deliveries, and settlement of trades
within the Depositary, continue to function appropriately. This program includes
a technical assessment and a remediation plan, each of which is complete.
Additionally, the Depositary's plan includes a testing phase, which is expected
to be completed within appropriate time frames.
However, the Depositary's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as third party vendors from whom the Depositary licenses
software and hardware, and third party vendors on whom the Depositary relies for
information or the provision of services, including telecommunication and
electrical utility service providers, among others. The Depositary has informed
its participants and other members of the financial community that it is
contacting (and will continue to contact) third party vendors from whom the
Depositary acquires services to: (1) impress upon them the importance of such
services being Year 2000 compliant; and (2) determine the extent of their
efforts for Year 2000 remediation (and, as appropriate, testing) of their
services. In addition, the Depositary is in the process of developing such
contingency plans as it deems appropriate.
We have obtained the foregoing information concerning the Depositary and
the Depositary's book-entry system from sources we believe to be reliable, but
we take no responsibility for the accuracy of this information.
S-7
<PAGE> 8
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated the date hereof (the "Underwriting Agreement"), the underwriters
named below (the "Underwriters") have severally agreed to purchase, and we have
agreed to sell to them, the respective principal amount of Notes set forth
opposite their respective names below.
<TABLE>
<CAPTION>
PRINCIPAL
NAME AMOUNT OF NOTES
---- ---------------
<S> <C>
Morgan Stanley & Co. Incorporated...................... $25,000,000
Robert W. Baird & Co. Incorporated..................... 12,500,000
A.G. Edwards & Sons, Inc............................... 12,500,000
-----------
Total........................................ $50,000,000
===========
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Notes are subject to, among
other things, the approval of certain legal matters by their counsel and certain
other conditions. The Underwriters are obligated to take and pay for all the
Notes if any are taken.
The Underwriters propose initially to offer part of the Notes to the public
at the public offering price set forth on the cover page hereof and in part to
certain dealers at prices that represent a concession not in excess of .40% of
the principal amount of the Notes. Any Underwriter may allow, and such dealers
may reallow, a concession not in excess of .25% of the principal amount of the
Notes to certain other dealers. After the initial offering of the Notes, the
offering price and other selling terms may from time to time be varied by the
Underwriters.
We do not intend to apply for listing of the Notes on a national securities
exchange, but have been advised by the Underwriters that they presently intend
to make a market in the Notes, as permitted by applicable laws and regulations.
The Underwriters are not obligated, however, to make a market in the Notes and
any such market making may be discontinued at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Notes.
In order to facilitate the offering of the Notes, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the Notes. Specifically, the Underwriters may over-allot in connection with this
offering, creating short positions in the Notes for their own account. In
addition, to cover over-allotments or to stabilize the price of the Notes, the
Underwriters may bid for, and purchase, Notes in the open market. Finally, the
Underwriters may reclaim selling concessions allowed to an underwriter or dealer
for distributing Notes in this offering, if the Underwriters repurchase
previously distributed Notes in transactions that cover syndicate short
positions, in stabilization transactions or otherwise. Any of these activities
may stabilize or maintain the market price of the Notes above independent market
levels. The Underwriters are not required to engage in these activities, and may
end any of these activities at any time.
We have agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
The Underwriters or their affiliates have provided and may in the future
continue to provide investment banking and other financial services to us in the
ordinary course of business for which they have received and will receive
customary compensation.
S-8
<PAGE> 9
PROSPECTUS
$50,000,000
Wisconsin Gas Company
NOTES
------------------------
Wisconsin Gas Company may offer from time to time unsecured notes. The specific
terms of any notes offered will be included in a supplement to this prospectus.
The prospectus supplement will also describe the manner in which the notes will
be offered.
------------------------
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
------------------------
MORGAN STANLEY DEAN WITTER
ROBERT W. BAIRD & CO.
INCORPORATED
A.G. EDWARDS & SONS, INC.
January 14, 1999
<PAGE> 10
You should rely only on the information contained, or incorporated by
reference in, this prospectus and the accompanying prospectus supplement. We
have not authorized anyone to provide you with information different from that
contained in this prospectus and the accompanying prospectus supplement. We are
offering to sell the notes and seeking offers to buy the notes only in
jurisdictions where offers and sales are permitted. The information contained in
this prospectus and the accompanying prospectus supplement is accurate only as
of the dates of this prospectus and the accompanying prospectus supplement,
regardless of the time of delivery of this prospectus and the accompanying
prospectus supplement or any sale of the notes. In this prospectus and the
accompanying prospectus supplement, the "Company," "we," "us" and "our" refer to
Wisconsin Gas Company.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
WHERE YOU CAN FIND MORE INFORMATION......................... 3
THE COMPANY................................................. 4
USE OF PROCEEDS............................................. 4
RATIOS OF EARNINGS TO FIXED CHARGES......................... 5
DESCRIPTION OF THE NOTES.................................... 5
PLAN OF DISTRIBUTION........................................ 13
LEGAL MATTERS............................................... 15
EXPERTS..................................................... 15
</TABLE>
2
<PAGE> 11
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, and other information with
the Securities and Exchange Commission. You may read and copy any reports,
statements or other information that we file with the Commission at the
Commission's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms. Our Commission filings are also
available to the public from commercial document retrieval services and on the
Internet world wide web site maintained by the Commission at
"http://www.sec.gov".
We have filed with the Commission a registration statement on Form S-3
under the Securities Act of 1933 with respect to the notes. This prospectus does
not contain all of the information set forth in such registration statement,
certain parts of which have been omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to
such registration statement.
The Commission allows us to "incorporate by reference" the information we
file with them, which means we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus. The most recent information that we file with
the Commission automatically updates and supersedes any older information. We
incorporate by reference the following documents we have filed or may file with
the Commission pursuant to Section 13 of the Securities Exchange Act of 1934:
- Our Annual Report on Form 10-K for the year ended December 31, 1997; and
- Our Quarterly Reports on Form 10-Q for the quarters ended March 31, June
30 and September 30, 1998; and
- All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 after the date of this prospectus,
until all of the notes being offered by this prospectus are sold.
You may request a copy of any or all of the information that has been
incorporated by reference in this prospectus but not delivered with this
prospectus at no charge to you. If you would like to obtain this information
from us, please direct your request, either in writing or by telephone, to
Robert A. Nuernberg at Wisconsin Gas Company, 626 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202 (Telephone: (414) 385-7000).
THE COMPANY
Wisconsin Gas Company is a Wisconsin corporation and a wholly-owned
subsidiary of WICOR, Inc. We are the largest distributor of natural gas in
Wisconsin, and conduct all of our business in Wisconsin. At December 31, 1997,
we distributed gas to approximately 521,000 residential, commercial and
industrial customers in 521 communities throughout Wisconsin with an approximate
population of 2,000,000 based on 1997 estimates provided by the State of
Wisconsin. We are subject to the jurisdiction of the Public Service Commission
of Wisconsin as to various phases of our operations, including rates, service
and the issuance of securities.
Our principal executive offices are located at 626 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202, and our telephone number is (414) 385-7000.
3
<PAGE> 12
Wisconsin Gas Company's parent, WICOR, Inc., is a diversified holding
company with two principal business groups. WICOR's Energy Group is engaged in
natural gas distribution and related services, and WICOR's Manufacturing Group
is engaged in the manufacture of pumps and processing equipment used to pump,
control, transfer, hold and filter water and other fluids. WICOR has no
obligation with respect to and is not a guarantor of the notes.
USE OF PROCEEDS
The net proceeds from the sale of the notes will be added to our general
funds and used for general corporate purposes. Net proceeds from the sale of the
notes may also, depending on market conditions, be used to discharge a portion
of our outstanding debt. The debt to be discharged, if any, is described in the
applicable prospectus supplement.
RATIOS OF EARNINGS TO FIXED CHARGES
Set forth below are the ratios of earnings to fixed charges (unaudited) for
Wisconsin Gas Company for the twelve months ended September 30, 1998 and for the
last five years:
<TABLE>
<CAPTION>
TWELVE MONTHS YEAR ENDED DECEMBER 31,
ENDED --------------------------------
SEPTEMBER 30, 1998 1997 1996 1995 1994 1993
- ------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
3.67 4.54 4.90 3.96 2.89 2.92
</TABLE>
The ratio of earnings to fixed charges for the nine months ended September
30, 1998 was 2.77. For the purpose of computing the ratios of earnings to fixed
charges, earnings have been calculated by adding to income before interest
expense, federal and state income taxes and the estimated interest component of
rentals. Fixed charges represent interest expense, amortization of debt
discount, premium and expense and the estimated interest component of rentals.
DESCRIPTION OF THE NOTES
This prospectus describes certain general terms and provisions of the
notes. When we offer to sell a particular series of notes, we will describe the
specific terms of the series in a supplement that will accompany this
prospectus. We will also indicate in the prospectus supplement whether the
general terms and provisions described in this prospectus apply to a particular
series of notes.
We may offer under this prospectus up to $50,000,000 aggregate principal
amount of notes, or if notes are issued at a discount, such principal amount as
may be sold for an initial public offering price of up to $50,000,000. Unless
otherwise specified in a supplement to this prospectus, the notes will be our
direct, unsecured obligations and will rank equally with all of our other
unsecured and unsubordinated indebtedness.
The notes will be issued under an indenture, dated September 1, 1990,
between us and Firstar Bank Milwaukee, N.A., as trustee. There is no limit on
the aggregate principal amount of notes that may be issued under the indenture.
The indenture provides that notes may be issued from time to time in one or more
series pursuant to the terms of one or more officers' certificates or
supplemental indentures creating the series. As of the date of
4
<PAGE> 13
this prospectus, there are two series of notes with an aggregate principal
amount of $110,000,000 outstanding under the indenture.
We have summarized selected portions of the indenture below. The summary is
not complete. The form of the indenture has been incorporated by reference as an
exhibit to the registration statement and you should read the indenture for
provisions that may be important to you. In the summary below, we have included
references to the section numbers of the indenture so that you can easily locate
these provisions. Capitalized terms used in the summary have the meaning
specified in the indenture.
GENERAL
The terms of each series of notes will be established by or pursuant to a
resolution of our Board of Directors and set forth or determined in the manner
provided in an officers' certificate or by a supplemental indenture. (Section
301) The particular terms of each series of notes will be described in a
prospectus supplement relating to such series (including any pricing
supplement).
We can issue an unlimited amount of notes under the indenture that may be
in one or more series with the same or various maturities, at par, at a premium,
or at a discount. We will set forth in a prospectus supplement (including any
pricing supplement) relating to any series of notes being offered, the initial
offering price, the aggregate principal amount and the following terms of the
notes:
- the title of the notes;
- any limit on the aggregate principal amount of the notes of the series;
- the person to whom interest on the notes of the series will be payable if
other than the registered holder;
- the date or dates on which we will pay the principal on the notes of the
series;
- the rate or rates (which may be fixed or variable) per annum (or the
method used to determine the rate or rates) at which the notes of the
series will bear interest, the date or dates from which interest will
accrue, the date or dates on which interest will commence and be payable
and any regular record date for the interest payable on any interest
payment date (or the method for establishing such date or dates);
- the place or places where principal of (and premium, if any) and interest
on the notes of the series will be payable;
- the terms and conditions upon which we may redeem the notes of the
series;
- any obligation we have to redeem or purchase the notes of the series
pursuant to any sinking fund or analogous provisions or at the option of
a holder of the notes of the series;
- the dates on which and the price or prices at which we will repurchase
notes of the series at the option of the holders of notes of the series
and other detailed terms and provisions of these repurchase obligations;
- the denominations in which the notes of the series will be issued, if
other than denominations of $1,000 and any integral multiple thereof;
- the portion of principal amount of the notes of the series payable upon
declaration of acceleration of the maturity date, if other than the
principal amount;
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<PAGE> 14
- the currency of denomination of the notes of the series;
- if payments of principal of (and premium, if any) or interest on the
notes of the series are to be payable, at our election or a holder's
election, in one or more currencies or currency units other than that or
those in which the notes of the series are denominated, the period or
periods within which, and the terms and conditions upon which, the
election may be made;
- the manner in which the amounts of payment of principal of (and premium,
if any) or interest on the notes of the series will be determined, if
these amounts may be determined by reference to an index;
- the manner in which a temporary global note representing all the notes of
the series will be issued and subsequently exchanged for definitive notes
of the series;
- whether the notes of the series will be issued in the form of
certificated note securities or global note securities; and
- any other terms of the notes of the series which terms may not be
inconsistent with, modify or delete any provisions of the indenture.
(Sections 301 and 901)
We may issue notes that provide for an amount less than their stated
principal amount to be due and payable upon declaration of acceleration of their
maturity pursuant to the terms of the indenture. We will provide you with
information on the federal income tax considerations and other special
considerations applicable to any of these notes in the applicable prospectus
supplement.
If we denominate the purchase price of any of the notes in a foreign
currency or currencies or a foreign currency unit or units, or if the principal
of (and premium, if any) and interest on any series of notes is payable in a
foreign currency or currencies or a foreign currency unit or units, we will
provide you with information on the restrictions, elections, general tax
considerations, specific terms and other information with respect to that issue
of notes and such foreign currency or currencies or foreign currency unit or
units in the applicable prospectus supplement.
Unless otherwise indicated in the prospectus supplement, the notes will be
issued in fully registered form, without coupons, in denominations of $1,000 or
any multiple of $1,000. At any time and from time to time we may deliver
executed notes to the trustee for authentication and, subject to the conditions
set forth in the indenture, the trustee shall authenticate and deliver such
notes as provided in the indenture. No note shall be entitled to any benefit
under the indenture or be valid or obligatory for any purpose unless there
appears on such note a certificate of authentication substantially in the form
provided for in the indenture. All notes will be dated the date of their
authentication. (Sections 301 and 303)
Unless otherwise indicated in the prospectus supplement, principal of (and
premium, if any) and interest on the notes will be payable at an office
maintained by the trustee for such purpose in New York, New York and the notes
will be exchangeable and transfers thereof will be registerable at the principal
corporate trust office of the trustee in Milwaukee, Wisconsin, provided that, at
our option, payment of interest may be made by check mailed to the address of
the person entitled thereto as it appears in the note register. (Sections 202,
305 and 1002)
Notes may be exchanged for an equal aggregate principal amount of notes of
other authorized denominations without service charge, except for any tax or
other governmental
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charge that may be imposed. (Section 305) Interest on each note (with limited
exceptions as provided in the indenture) will be paid to the person in whose
name such note is registered at the close of business on the applicable record
date specified in the note. (Section 307) The notes of any series, if so
specified with respect to a particular series, may be issued in permanent global
form.
The notes will be unsecured and unsubordinated obligations and will rank as
to priority of payment equally with all of our other unsecured and
unsubordinated indebtedness. Substantially all of our properties and franchises
are subject to the lien of an Indenture of Mortgage and Deed of Trust, dated as
of November 1, 1950 (the "First Mortgage Indenture"), between us and Chase
Manhattan Trust Company and Theodore Kravits, as trustees. As of the date of
this prospectus, one series of first mortgage bonds (the "First Mortgage Bonds")
is outstanding under the First Mortgage Indenture. The final principal payment
on the outstanding series of First Mortgage Bonds is due on February 15, 1999.
We anticipate terminating the First Mortgage Indenture and obtaining a release
of the lien against our properties and franchises as soon as practicable after
the repayment at maturity of the First Mortgage Bonds on February 15, 1999.
The notes may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the time of
issuance is below market rates. Certain federal income tax consequences and
special considerations applicable to any such notes will be described in the
applicable prospectus supplement. (Section 101)
PERMANENT GLOBAL NOTES
If any notes of a series are issuable in permanent global form, the
applicable prospectus supplement will describe the circumstances, if any, under
which beneficial owners of interests in any such permanent global note may
exchange such interests for notes of such series. Principal of (and premium, if
any) and interest on a permanent global note will be payable in the manner
described in the prospectus supplement relating to such global note. (Section
203)
RESTRICTIVE COVENANTS
The indenture does not limit the amount of unsecured debt that we can
incur. The indenture also does not expressly address the effect of a highly
leveraged transaction, however structured, on the holders of notes. As discussed
below, however, the limitations on our ability to create liens, to issue
additional First Mortgage Bonds and to enter into sale and leaseback
transactions provide some protection to note holders in such an event.
Limitations on Liens. So long as the notes of any series remain
outstanding, we will not, and will not permit any subsidiary to, create any
mortgage on, pledge of, or other lien on or security interest in, any of our
properties or assets to secure any indebtedness, unless we also make all of the
notes of that series equally and ratably secured, except for the following:
- the First Mortgage Indenture securing the First Mortgage Bonds;
- mortgages on property existing at the time of acquisition or construction
of such property (or created within one year after completion of such
acquisition or construction), whether by purchase, merger, construction
or otherwise (or on the property of a subsidiary at the date it became a
subsidiary), or to secure the payment of all or any part of the purchase
price or construction cost of such
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property, including the extension of any such mortgages to repairs,
renewals, replacements, substitutions, additions and improvements made on
such property;
- any extensions, renewals or replacements (or successive extensions,
renewals or replacements), in whole or in part, of mortgages otherwise
permitted by the indenture;
- the pledge of any bonds or other securities at any time issued under any
of the mortgages otherwise permitted by the indenture; or
- certain permitted encumbrances under the indenture. (Section 1004)
Permitted encumbrances under the indenture include (a) the pledge or
assignment in the ordinary course of business of gas inventory, accounts
receivable or customers' installment paper, and (b) encumbrances not otherwise
permitted if the aggregate of all of our obligations secured by such
encumbrances, together with the aggregate net proceeds received by us in respect
of certain outstanding sale and leaseback transactions permitted under the
indenture, does not exceed 10% of our consolidated tangible net worth. (Section
101)
Limitation on First Mortgage Bonds. So long as any notes of any series
remain outstanding, we will not issue any additional First Mortgage Bonds under
the First Mortgage Indenture, except in connection with transfers, exchanges,
replacements, substitutions or reissues of First Mortgage Bonds of any series
that are already outstanding. (Section 1006)
Limitations on Sales and Leasebacks. So long as there are notes of any
series outstanding, we will not enter into a sale and leaseback transaction for
a term (including renewals) of more than three years with respect to any
principal property acquired or placed into service more than 180 days before the
effective date of such lease arrangement unless:
- we would be entitled to incur indebtedness secured by a mortgage on such
principal property in a principal amount equal to the net proceeds we
received in respect of such sale and leaseback transaction without
equally and ratably securing the notes; or
- we retire, or cause to be retired, within 120 days of the effective date
of the sale and leaseback transaction, funded debt which is senior to or
on parity with the notes in an amount equal to the net proceeds we
received with respect to such sale and leaseback transaction. (Section
1005)
MODIFICATION AND WAIVER
We and the trustee may modify and amend the indenture with the consent of
the holders of at least a majority in principal amount of the outstanding notes
of each series affected by the modifications or amendments. However, we and the
trustee may not make any modification or amendment without the consent of the
holders of each affected note then outstanding if that amendment will:
- change the fixed maturity or reduce the principal amount of any note;
- reduce the rate or change the time of payment of interest on any note, or
reduce any premium payable upon redemption of any note;
- reduce the amount of principal of an original issue discount note payable
upon acceleration of the maturity of such note;
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- impair the right to institute suit on the note or change any place of
payment where, or currency in which, the note or interest on the note is
payable; or
- reduce the amount of debt securities whose holders must consent to an
amendment or waiver. (Section 902)
Except for certain specified provisions, the holders of at least a majority
in principal amount of the outstanding notes of any series may on behalf of the
holders of all notes of that series waive our compliance with certain
restrictive covenants of the indenture. (Section 1009) The holders of a majority
in principal amount of the outstanding notes of any series may on behalf of the
holders of all the notes of such series waive any past default under the
indenture with respect to that series and its consequences, except a default in
the payment of the principal of (and premium, if any) or any interest on any
note of that series or in respect of a covenant or provision which cannot be
modified or amended without the consent of the holder of each outstanding note
of the series affected; provided, however, that the holders of a majority in
principal amount of the outstanding notes of any series may rescind an
acceleration and its consequences, including any related payment default that
resulted from the acceleration. (Section 513)
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may consolidate with or merge with or into, or convey, transfer or lease
all or substantially all of our properties and assets to, any person (a
"successor person") provided:
- we are the surviving corporation, or the successor person (if other than
Wisconsin Gas Company) is a corporation organized and validly existing
under the laws of any U.S. domestic jurisdiction and expressly assumes
our obligations on the notes and under the indenture;
- immediately after giving effect to the transaction, no Event of Default,
and no event which, after notice or lapse of time, or both, would become
an Event of Default, shall have occurred and be continuing under the
indenture; and
- certain other conditions are met. (Section 801)
EVENTS OF DEFAULT
"Event of Default" means with respect to any series of notes any of the
following:
- default in the payment of any interest upon any note of that series when
it becomes due and payable, and continuance of that default for a period
of 30 days;
- default in the payment of principal of (or premium if any on) any note of
the series when due and payable;
- default in the payment of any sinking fund payment or similar payment
with respect to the notes of that series, when and as due in respect of
any note of that series and continuance of such default for a period of
30 days;
- default in the performance or breach of any other covenant or warranty by
us in the indenture (other than a covenant or warranty that has been
included in the indenture solely for the benefit of a series of notes
other than that series), which default continues uncured for a period of
90 days after we receive written notice from the trustee or we and the
trustee receive written notice from the holders of not
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less than 25% in principal amount of the outstanding notes of that series
as provided in the indenture;
- certain events of bankruptcy, insolvency or reorganization; and
- any other Event of Default provided with respect to notes of that series.
(Section 501)
No Event of Default with respect to a particular series of notes (except as
to certain events of bankruptcy, insolvency or reorganization) necessarily
constitutes an Event of Default with respect to any other series of notes. The
occurrence of an Event of Default may constitute an event of default under our
bank credit agreements in existence from time to time. In addition, the
occurrence of certain Events of Default or an acceleration under the indenture
may constitute an event of default under certain of our other indebtedness
outstanding from time to time.
If an Event of Default with respect to notes of any series at the time
outstanding occurs and is continuing (except as to certain events of bankruptcy,
insolvency or reorganization), then the trustee or the holders of not less than
25% in principal amount of the outstanding notes of that series may, by a notice
in writing to us (and to the trustee if given by the holders), declare to be due
and payable immediately the principal (or, if the notes of that series are
original issue discount notes, that portion of the principal amount as may be
specified in the terms of that series) of and accrued and unpaid interest, if
any, on all notes of that series. In the case of an Event of Default resulting
from certain events of bankruptcy, insolvency or reorganization, the principal
(or such specified amount) of and accrued and unpaid interest, if any, on all
outstanding notes will become and be immediately due and payable without any
declaration or other act on the part of the trustee or any holder of outstanding
notes. At any time after a declaration of acceleration with respect to notes of
any series has been made, but before a judgment or decree for payment of the
money due has been obtained by the trustee, the holders of a majority in
principal amount of the outstanding notes of that series may rescind and annul
the acceleration if all Events of Default, other than the non-payment of
accelerated principal and interest, if any, with respect to notes of that
series, have been cured or waived as provided in the indenture. (Section 502)
For information as to waiver of defaults see the discussion set forth under
"-- Modification and Waiver." We refer you to the prospectus supplement relating
to any series of notes that are original issue discount notes for the particular
provisions relating to acceleration of a portion of the principal amount of such
original issue discount notes upon the occurrence of an Event of Default.
The indenture provides that the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
holder of outstanding notes, unless the trustee receives indemnity satisfactory
to it against any loss, liability or expense. (Section 603) Subject to certain
rights of the trustee, the holders of a majority in principal amount of the
outstanding debt securities of any series will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the trustee or exercising any trust or power conferred on the trustee with
respect to the debt securities of that series. (Section 512)
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No holder of any note of any series will have any right to institute any
proceeding, judicial or otherwise, with respect to the indenture or for the
appointment of a receiver or trustee, or for any remedy under the indenture,
unless:
- that holder has previously given to the trustee written notice of a
continuing Event of Default with respect to notes of that series; and
- the holders of at least a majority in principal amount of the outstanding
debt securities of that series have made written request and offered
reasonable indemnity, to the trustee to institute the proceeding as
trustee, and the trustee has not received from the holders of not less
than 25% in principal amount of the outstanding notes of that series a
direction inconsistent with that request and has failed to institute the
proceeding within 90 days. (Section 507)
Notwithstanding the foregoing, the holder of any note will have an absolute
and unconditional right to receive payment of the principal of, premium and any
interest on that note on or after the due dates expressed in that note and to
institute suit for the enforcement of payment. (Section 507)
The indenture requires us, within 120 days after the end of our fiscal
year, to furnish to the trustee a statement as to compliance with the indenture.
(Section 1007) The indenture provides that the trustee may withhold notice to
the holders of notes of any series of any Event of Default (except in payment on
any notes of that series) with respect to notes of that series if it in good
faith determines that withholding notice is in the interest of the holders of
those notes. (Section 602)
CONCERNING THE TRUSTEE
It is expected that the trustee will act as paying agent with respect to
the notes. We have a borrowing arrangement with the trustee.
DEFEASANCE OF NOTES AND CERTAIN COVENANTS IN CERTAIN CIRCUMSTANCES
Legal Defeasance. The indenture provides that, unless otherwise provided
by the terms of the applicable series of notes, we may be discharged from any
and all obligations in respect of the notes of any series (except for certain
obligations to register the transfer or exchange of notes of such series, to
replace stolen, lost or mutilated notes of such series, and to maintain paying
agencies and certain provisions relating to the treatment of funds held by
paying agents). We will be so discharged upon the deposit with the trustee, in
trust, of money and/or U.S. Government Obligations that, through the payment of
interest and principal in accordance with their terms, will provide money in an
amount sufficient in the opinion of a nationally recognized firm of independent
public accountants to pay and discharge each installment of principal of (and
premium, if any) and interest on and any mandatory sinking fund payments in
respect of the notes of the series on the stated maturity of those payments in
accordance with the terms of the indenture and those notes.
This discharge may occur only if, among other things, we have delivered to
the trustee an opinion of counsel stating that we have received from, or there
has been published by, the United States Internal Revenue Service a ruling or,
since the date of execution of the indenture, there has been a change in the
applicable United States federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the holders of the
notes of that series will not recognize income, gain or loss for United States
federal income tax purposes as a result of the deposit, defeasance and discharge
and will
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be subject to United States federal income tax on the same amounts and in the
same manner and at the same times as would have been the case if the deposit,
defeasance and discharge had not occurred. (Section 401)
Defeasance of Certain Covenants. The indenture provides that, unless
otherwise provided by the terms of the applicable series of notes, upon
compliance with certain conditions:
- we may omit to comply with the covenants described under the heading
"Restrictive Covenants," "Consolidation, Merger and Sale of Assets" and
certain other covenants set forth in the indenture, as well as any
additional covenants which may be set forth in the applicable prospectus
supplement; and
- any omission to comply with those covenants will not constitute an Event
of Default with respect to the notes of that series ("covenant
defeasance").
The conditions include:
- depositing with the trustee money and/or U.S. Government Obligations
that, through the payment of interest and principal in accordance with
their terms, will provide money in an amount sufficient in the opinion of
a nationally recognized firm of independent public accounts to pay and
discharge each installment of principal of (and premium, if any) and
interest on and any mandatory sinking fund payments in respect of the
notes of that series on the stated maturity of those payments in
accordance with the terms of the indenture and those notes; and
- no Event of Default or event which with notice or passage of time would
become an Event of Default has occurred and continues. (Section 402)
Covenant Defeasance and Events of Default. In the event we exercise our
option to effect covenant defeasance with respect to any series of notes and the
notes of that series are declared due and payable because of the occurrence of
any Event of Default, the amount of money and/or U.S. Government Obligations on
deposit with the trustee will be sufficient to pay amounts due on the notes of
that series at the time of their stated maturity but may not be sufficient to
pay amounts due on the notes of that series at the time of the acceleration
resulting from the Event of Default. However, we shall remain liable for those
payments.
The applicable prospectus supplement may further describe the provisions,
if any, permitting or restricting such defeasance or covenant defeasance with
respect to the notes of a particular series.
Federal Income Tax Consequences. Under current Federal income tax law, the
deposit and defeasance described above under "Defeasance of Certain Covenants"
will not result in a taxable event to any holder of notes or otherwise affect
the federal income tax consequences of an investment in the notes of any series.
The federal income tax treatment of the deposit and discharge described
above under "Legal Defeasance" is not clear. A deposit and discharge may be
treated as a taxable exchange of such notes for beneficial interests in the
trust consisting of the deposited money or securities. In that event, a holder
of notes may be required to recognize gain or loss equal to the difference
between the holder's adjusted basis for the notes and the fair market value of
the holder's beneficial interest in such trust. Thereafter, such holder may be
required to include in income a share of the income, gain and loss of the trust.
As described above, it is generally a condition to such a deposit and discharge
to obtain an
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opinion of tax counsel, or our receipt from, or publication of a ruling by, the
Internal Revenue Service, to the effect that such deposit and discharge will not
alter the holders' tax consequences that would have been applicable in the
absence of the deposit and discharge. Purchasers of the notes should consult
their own advisors with respect to the tax consequences to them of such deposit
and discharge, including the applicability and effect of tax laws other than
federal income tax law.
PLAN OF DISTRIBUTION
We may, from time to time, sell notes (1) through underwriters or dealers,
(2) directly to one or more purchasers, or (3) through agents. A prospectus
supplement will set forth the terms of the offering of the notes, including the
name or names of any underwriters, the purchase price of the notes, our proceeds
from the sale, any underwriting discounts and commissions, any initial public
offering price, any discounts or concessions allowed or reallowed or paid to
dealers, and any securities exchange or market on which the notes may be listed.
Only underwriters named in such prospectus supplement are deemed to be
underwriters in connection with the offering of such notes.
If underwriters are used in the sale, the notes will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The obligations of
the underwriters to purchase the notes will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all the notes of
the series offered by the prospectus supplement if any of the notes are
purchased. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
We may also sell notes directly or through agents we designate from time to
time. Any agent involved in the offering and sale of notes in respect of which
this prospectus is delivered will be named, and any commissions we pay to such
agent will be set forth, in the related prospectus supplement. Unless otherwise
indicated in the related prospectus supplement, any such agent will be acting on
a reasonable efforts basis for the period of its appointment.
If a dealer is utilized in the sale of the notes, the Company will sell
such notes to the dealer, as principal. The dealer may then resell such notes to
the public at varying prices to be determined by such dealer at the time of
resale. Dealers may be entitled to indemnification by the Company against
certain liabilities, including liabilities under the Securities Act, and may be
customers of, engage in transactions with, or perform services for the Company
in the ordinary course of business.
The place and time of delivery for the notes in respect of which this
Prospectus is delivered are set forth in the accompanying prospectus supplement.
LEGAL MATTERS
Foley & Lardner of Milwaukee, Wisconsin will issue an opinion about certain
legal matters with respect to the notes for us. Any underwriters will be advised
about the other issues relating to any offering by their own legal counsel. Jere
D. McGaffey, a partner of Foley & Lardner, is a director of Wisconsin Gas
Company and its parent WICOR, Inc.. As of January 14, 1999, Foley & Lardner
attorneys who participated in the preparation of
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this prospectus, including Mr. McGaffey, beneficially owned an aggregate of
6,747 shares of WICOR, Inc. common stock.
EXPERTS
The financial statements included in our Annual Report on Form 10-K, for
the year ended December 31, 1997, incorporated by reference in this prospectus
and in the registration statement, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect to
said financial statements, and are incorporated by reference in this prospectus
in reliance upon the authority of said firm as experts in auditing and
accounting in giving said reports.
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