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PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED DECEMBER 23, 1997)
$50,000,000
NORTHERN ILLINOIS GAS COMPANY
(DOING BUSINESS AS NICOR GAS COMPANY)
FIRST MORTGAGE BONDS, 5 3/4% SERIES DUE JUNE 1, 2003
Interest on the New Bonds is payable semiannually on June 1 and December 1 of
each year, commencing December 1, 1998. The New Bonds may not be redeemed by the
Company prior to maturity.
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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.
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UNDERWRITING
INITIAL PUBLIC DISCOUNTS AND PROCEEDS TO
OFFERING PRICE(1) COMMISSIONS(2) COMPANY(1)(3)
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<S> <C> <C> <C>
Per Bond 99.533% .213% 99.32%
Total $49,766,500 $106,500 $49,660,000
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(1) Plus accrued interest from June 1, 1998.
(2) The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting expenses payable by the Company estimated at $177,000.
The New Bonds are offered subject to receipt and acceptance by the Underwriter,
to prior sale and to the Underwriter's right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the New Bonds will be made through the facilities of The
Depository Trust Company, on or about June 9, 1998.
ABN AMRO INCORPORATED
The date of this Prospectus Supplement is June 2, 1998.
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CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE NEW BONDS.
SPECIFICALLY, THE UNDERWRITER MAY OVERALLOT IN CONNECTION WITH THE OFFERING, AND
MAY BID FOR, AND PURCHASE, THE NEW BONDS IN THE OPEN MARKET. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING".
USE OF PROCEEDS
The net proceeds from the sale of the New Bonds, together with a portion of
the proceeds from the February 1998 sale of $50,000,000 of the Company's 6.58%
First Mortgage Bonds due in 2028 and other corporate funds, will replenish funds
used for the March 1998 redemption of $75,000,000 of 8 1/4% First Mortgage Bonds
due in 2022. The balance of the proceeds from the sale of the 6.58% First
Mortgage Bonds replenished funds used for the February 1998 maturity of
$25,000,000 of 5 7/8% First Mortgage Bonds.
DESCRIPTION OF NEW BONDS
General Interest at the annual rate set forth on the cover page of the
Prospectus Supplement will accrue from June 1, 1998, and is to be payable
semiannually on June 1 and December 1 beginning December 1, 1998, to the person
in whose name the New Bond is registered on the May 15 or November 15 (whether
or not a business day) next preceding such interest payment date. The New Bonds
will be limited to $50,000,000 aggregate principal amount, will be issued in
fully registered form only, in denominations of $1,000 and integral multiples
thereof, and will mature June 1, 2003.
New Bonds of any denomination will be exchangeable for a like aggregate
principal amount of New Bonds of different authorized denominations upon
surrender of such New Bonds, with the request for such exchange, at Harris Trust
and Savings Bank, Corporate Trust Department, 311 West Monroe Street, Chicago,
Illinois, or at Harris Trust Company of New York, 77 Water St., 4th Floor, New
York, New York. Principal and interest will be payable at the offices identified
in the preceding sentence, except that any installment of interest on the New
Bonds may, at the Company's option, be paid by mailing checks for such interest
payable to or upon the written order of the person entitled thereto to the
address of such person as it appears on the registration books.
Reference is made to the Prospectus for a description of the general terms
of the New Bonds which the particular description herein supplements.
Redemption. The New Bonds may not be redeemed by the Company prior to
maturity.
Sinking Fund. No sinking fund is provided for the New Bonds.
UNDERWRITING
ABN AMRO Incorporated (the "Underwriter") has agreed to purchase from the
Company, and the Company has agreed to sell to the Underwriter, all of the New
Bonds. The Underwriting Agreement provides that the obligation of the
Underwriter is subject to certain conditions precedent and that the Underwriter
will be obligated to purchase all of the New Bonds if any are purchased.
The Company has been advised by the Underwriter as follows:
The Underwriter proposes to offer part of the New Bonds directly to the
public at the public offering price set forth on the cover page of this
Prospectus Supplement and part to dealers at a price which represents a
concession of 0.20% of the principal amount under the public offering price, and
the Underwriter may offer the New Bonds to certain brokers or dealers who are
either a parent or subsidiary of the Underwriter at not less than such price to
dealers. The Underwriter may allow and such dealers may reallow a concession,
not in excess of 0.10% of the principal amount, to certain other dealers. After
the initial public offering, the public offering price and concessions may be
changed.
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In order to facilitate the offering of the New Bonds, the Underwriter may
engage in transactions that stabilize, maintain or otherwise affect the price of
the New Bonds. Specifically, the Underwriter may overallot in connection with
the offering, creating a short position in the New Bonds for its own account. In
addition, to cover overallotments or to stabilize the price of the New Bonds,
the Underwriter may bid for, and purchase, the New Bonds in the open market. Any
of these activities may stabilize or maintain the market price of the New Bonds
above independent market levels. The Underwriter is not required to engage in
these activities and may end any of these activities at any time.
There is presently no trading market for the New Bonds and there is no
assurance that a market will develop. Although it is under no obligation to do
so, the Underwriter presently intends to act as a market maker for the New Bonds
in the secondary trading market but may discontinue market making at any time
without notice.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including civil liabilities under the Securities Act of 1933, as
amended.
The Company has a line of credit with ABN AMRO Bank, N.V., an affiliate of
ABN AMRO Incorporated.
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