<PAGE>
[CG&E LOGO]
The Cincinnati Gas & Electric Company
139 East Fourth Street, Cincinnati, Ohio 45202
[CINERGY COMPANY LOGO]
September 28, 1995
Dear Shareholder:
You are cordially invited to attend a Special Meeting of Shareholders of The
Cincinnati Gas & Electric Company to be held at its principal office, 139 East
Fourth Street, Cincinnati, Ohio, on November 20, 1995 at 4:00 p.m., eastern
standard time. Whether or not you plan to attend, we will greatly appreciate
your giving prompt attention to the attached materials.
The Company's Amended Articles of Incorporation ("Articles") presently limit
its ability to issue securities representing unsecured indebtedness to no more
than 20% of the aggregate of its capital, surplus and secured debt. This 20%
restriction limits the Company's flexibility in planning and financing its
business activities. With flexibility and cost leadership being crucial factors
to being successful in the new competitive utility environment, the Company may
ultimately be placed at a competitive disadvantage if this restriction is not
eliminated. Proposal 1, as set forth and explained in the Proxy Statement, would
amend the Articles by eliminating this restriction. In the event Proposal 1 is
not adopted, Proposal 2, as defined and explained in the Proxy Statement, would
eliminate the 20% restriction for a 10-year period, December 1, 1995 through
December 1, 2005.
It is important to your interests that all shareholders, regardless of the
number of shares owned, participate in the affairs of the Company. Even if you
plan to attend the meeting, we urge you to mark, sign and date the enclosed
proxy and return it promptly. By signing and returning your proxy card promptly,
you are assuring that your shares will be voted.
Thank you for your continued interest in the Company.
Sincerely yours,
<TABLE>
<S> <C>
[JACKSON H. RANDOLPH SIGNATURE] [JAMES E. ROGERS SIGNATURE]
Jackson H. Randolph James E. Rogers
Chairman and Vice Chairman and
Chief Executive Officer Chief Operating Officer
</TABLE>
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
139 EAST FOURTH STREET
CINCINNATI, OHIO 45202
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON NOVEMBER 20, 1995
TO THE SHAREHOLDERS OF
THE CINCINNATI GAS & ELECTRIC COMPANY:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of The
Cincinnati Gas & Electric Company ("CG&E") will be held at its principal office,
139 East Fourth Street, Cincinnati, Ohio, on Monday, November 20, 1995 at 4:00
p.m. , eastern standard time, for the purposes of:
(1) removing from the Amended Articles of Incorporation ARTICLE FOURTH,
Clause 6-A(b), limiting CG&E's ability to issue unsecured indebtedness;
(2) in the event Proposal (1) is not adopted, amending ARTICLE FOURTH,
Clause 6-A(b), to authorize CG&E to issue or assume unsecured
indebtedness in excess of 20% of CG&E's secured indebtedness, plus
capital and surplus, until December 1, 2005;
and transacting such other business as may legally come before the meeting.
Only shareholders of record at the close of business on Thursday, September
21, 1995, will be entitled to vote at the meeting and at any adjournment
thereof. SHAREHOLDERS, WHETHER OR NOT THEY NOW EXPECT TO BE PRESENT AT THE
MEETING, ARE REQUESTED TO MARK, DATE AND SIGN THE ENCLOSED PROXY, AND RETURN IT
PROMPTLY. An addressed envelope, on which no postage stamp is necessary if
mailed in the United States, is enclosed for use in returning the proxy. A
shareholder executing and delivering the enclosed proxy has the power to revoke
it at any time before the authority granted by the proxy is exercised.
THE CINCINNATI GAS & ELECTRIC COMPANY
BY CHERYL M. FOLEY, SECRETARY
Dated: September 28, 1995
<PAGE>
THE CINCINNATI GAS & ELECTRIC COMPANY
139 EAST FOURTH STREET
CINCINNATI, OHIO 45202
(513) 381-2000
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is first being mailed on or about September 28, 1995 to
the shareholders of The Cincinnati Gas & Electric Company, an Ohio corporation
("CG&E"), in connection with the solicitation of proxies by the Board of
Directors (the "Board") of CG&E for use at the Special Meeting of Shareholders
to be held on November 20, 1995, or any adjournment or postponement of such
meeting (the "Special Meeting").
Effective October 24, 1994, the business combination (the "Merger") of CG&E
and PSI Energy, Inc., an Indiana corporation ("PSI Energy"), was consummated and
Cinergy Corp., a Delaware corporation ("Cinergy"), became the holding company
for CG&E and PSI Energy. Pursuant to the Merger, the former common stock holders
of CG&E and PSI Resources, Inc. became holders of common stock of Cinergy. CG&E
is an operating utility primarily engaged in providing electric and gas service
in the southwestern portion of Ohio and, through its principal subsidiary, The
Union Light, Heat and Power Company, in adjacent areas in Kentucky. PSI Energy
is an operating utility primarily engaged in providing electric service in north
central, central, and southern Indiana. Cinergy also owns all the common stock
of Cinergy Services, Inc. ("Cinergy Services") and Cinergy Investments, Inc.
("Cinergy Investments"). Cinergy Services provides management, financial,
administrative, engineering, legal and other services to Cinergy, CG&E, PSI
Energy, Cinergy Investments and subsidiaries thereof. Cinergy conducts its non-
utility businesses through Cinergy Investments and its subsidiaries.
As a result of the Merger, Cinergy became the owner of all outstanding
shares of CG&E's common stock. Issued and outstanding shares of CG&E's
cumulative preferred stock have voting rights under certain circumstances.
VOTING SECURITIES, RIGHTS AND PROCEDURES
Only holders of record of CG&E's voting securities at the close of business
on September 21, 1995 (the "Record Date") will be entitled to vote at the
Special Meeting. The outstanding voting securities of CG&E are divided into two
classes: common stock and cumulative preferred stock. The class of cumulative
preferred stock has been further issued in four series with the record holders
of all shares of the cumulative preferred stock voting together as one class.
The shares outstanding as of the Record Date, and the vote to which each share
is entitled, are as follows:
<TABLE>
<CAPTION>
CLASS SHARES OUTSTANDING VOTES PER SHARE
- ---------------------------------------------------------------- ------------------ ---------------
<S> <C> <C>
Common Stock (Par Value $8.50 per share) 89,663,086 1 vote
Cumulative Preferred Stock (Par Value $100 per share) 2,000,000 1 vote
</TABLE>
<PAGE>
The affirmative vote of the holders of two-thirds of the outstanding shares
of each of CG&E's (i) common stock and (ii) cumulative preferred stock, all
series voting together as one class, is required to approve each of the
proposals to be presented at the Special Meeting. Abstentions and broker
non-votes will have the effect of votes against each proposal. Cinergy has
advised CG&E that it intends to vote all of the outstanding shares of common
stock of CG&E in favor of Proposal 1, and, if necessary, Proposal 2.
Votes at the Special Meeting will be tabulated preliminarily by Cinergy
Services acting as transfer agent for CG&E. Inspectors of Election, duly
appointed by the presiding officer of the Special Meeting, will definitively
count and tabulate the votes and determine and announce the results at the
meeting. CG&E has no established procedure for confidential voting. There are no
rights of appraisal in connection with the proposals to be presented at the
Special Meeting.
PROXIES
The enclosed proxy is solicited by CG&E's Board, which recommends voting FOR
both items. All shares of CG&E's common stock will be voted in accordance with
the Board's recommendations. Shares of CG&E's cumulative preferred stock
represented by properly executed proxies received at or prior to the Special
Meeting will be voted in accordance with the instructions thereon. If no
instructions are indicated, duly executed proxies will be voted in accordance
with the recommendations of the Board. It is not anticipated that any other
matters will be brought before the Special Meeting. However, the enclosed proxy
gives discretionary authority to the proxy holders named therein should any
other matters be presented at the Special Meeting, and it is the intention of
the proxy holders to act on any other matters in accordance with their best
judgment.
Execution of a proxy will not prevent a shareholder from attending the
Special Meeting and voting in person. Any shareholder giving a proxy may revoke
it at any time before it is voted by delivering to the Secretary of CG&E written
notice of revocation bearing a later date than the proxy, by delivering a duly
executed proxy bearing a later date or by voting in person at the Special
Meeting.
CG&E will bear the cost of the solicitation of proxies by the Board. CG&E
has engaged Morrow & Co., Inc. to assist in the solicitation of proxies for a
fee estimated to be $5,000 plus reimbursement of reasonable out-of-pocket
expenses. Proxies will be solicited by mail. In addition, officers and employees
of Cinergy and/or its subsidiaries and/or CG&E may solicit proxies personally or
by telephone; such persons will receive no additional compensation for these
services.
CG&E has requested that brokerage houses and other custodians, nominees and
fiduciaries forward solicitation materials to the beneficial owners of shares of
CG&E's cumulative preferred stock held of record by such persons and will
reimburse such brokers and other fiduciaries for their reasonable out-of-pocket
expenses incurred in connection therewith.
2
<PAGE>
The solicitation of proxies, and the proposals as set forth herein, have
been approved by the Securities and Exchange Commission (the "SEC") under the
Public Utility Holding Company Act of 1935, as amended, (the "1935 Act").
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As noted above, Cinergy owns all the outstanding common stock of CG&E.
The only two holders of record known by management of CG&E to be beneficial
owners of more than 5% of any series of CG&E's cumulative preferred class of
stock as of the Record Date are set forth in the following table:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
- ------------------------------------ ---------------------- -----------
<S> <C> <C>
U.S. Leasing International, Inc. 247,500 shares 12.38%
733 Front Street
San Francisco, California 94111
Household Finance Corporation 105,000 shares 5.25%
2700 Sanders Road
Prospect Heights, Illinois 60070
</TABLE>
CG&E's directors and executive officers do not beneficially own any shares
of any series of CG&E's cumulative preferred stock as of the Record Date. The
beneficial ownership of Cinergy's common stock held by each director, as well as
directors and executive officers as a group, as of August 31, 1995, is set forth
in the following table:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME OF BENEFICIAL OWNER (1) OWNERSHIP
- ------------------------------------------------------------------- ----------------------
<S> <C>
Jackson H. Randolph 25,085 shares
James E. Rogers 201,642 shares(2)
William J. Grealis 251 shares
Directors and executive officers as a group 443,727 shares(3)
<FN>
- ------------------------
(1) No individual beneficially owns more than 0.13% of the outstanding shares
of common stock of Cinergy.
(2) Includes 139,403 shares which Mr. Rogers has the right to acquire within 60
days pursuant to the exercise of stock options.
(3) Includes 271,093 shares which respective director and/or executive officer
individually has the right to acquire within 60 days pursuant to the
exercise of stock options.
</TABLE>
3
<PAGE>
BUSINESS TO COME BEFORE THE SPECIAL MEETING
The following proposals are the only items of business expected to be
presented at the Special Meeting:
PROPOSAL 1: To remove from the Amended Articles of Incorporation (the
"Articles") ARTICLE FOURTH, Clause 6-A(b), limiting CG&E's ability to issue
unsecured indebtedness; and
PROPOSAL 2: In the event Proposal 1 is not adopted, to amend ARTICLE FOURTH,
Clause 6-A(b), to authorize CG&E to issue or assume unsecured indebtedness in
excess of 20% of CG&E's secured indebtedness, plus capital and surplus, until
December 1, 2005.
EXPLANATION OF PROPOSALS
PROPOSAL 1: Without the consent of the holders of CG&E's preferred stock, the
Articles currently prohibit the issuance or assumption of any unsecured notes,
debentures or other securities representing unsecured indebtedness (other than
for the purpose of refunding outstanding unsecured indebtedness or for the
redemption or retirement of outstanding shares of stock ranking prior to the
preferred stock with respect to the payment of dividends or upon the
dissolution, liquidation or winding up of CG&E) if, immediately after such
issuance or assumption, the total outstanding principal amount of all securities
representing unsecured debt (including unsecured securities then to be issued or
assumed) would exceed 20% of the aggregate of (1) the total principal amount of
all outstanding secured debt of CG&E at the time of such issuance or assumption,
and (2) the capital and surplus of CG&E, as stated on CG&E's books. For reasons
more fully discussed in "Reasons for Proposals" below, this proposal, if
adopted, would eliminate this restriction from the Articles.
PROPOSAL 2: In the event that Proposal 1 above is not adopted, CG&E proposes
that the Articles be amended to allow CG&E to issue and assume securities
representing unsecured indebtedness in excess of 20% through December 1, 2005,
without an additional vote of preferred shares. Specifically, ARTICLE FOURTH,
Clause 6-A(b) would be amended to read in its entirety as follows:
Clause 6-A.
* * * *
"(b) Issue any unsecured notes, debentures or other
securities representing unsecured indebtedness, or assume any
such unsecured securities, for purposes other than the
refunding of outstanding unsecured indebtedness theretofore
incurred or assumed by the Company or the redemption or other
retirement of outstanding shares of stock ranking prior to
the Cumulative Preferred Stock with respect to the payment of
dividends or upon the dissolution, liquidation or winding up
of the Company, whether voluntary or involuntary, if,
immediately after such issue or assumption, the total
principal amount of all unsecured notes,
4
<PAGE>
debentures or other securities representing unsecured
indebtedness issued or assumed by the Company and then
outstanding (including unsecured securities then to be issued
or assumed) would exceed 20% of the aggregate of (i) the
total principal amount of all bonds and other securities
representing secured indebtedness issued or assumed by the
Company and then to be outstanding, and (ii) the capital and
surplus of the Company as then to be stated on the books of
account of the Company; PROVIDED, HOWEVER, THAT THE
ABOVE-STATED LIMITATION SHALL NOT BE APPLICABLE FOR THE
PERIOD BEGINNING DECEMBER 1, 1995, TO AND INCLUDING DECEMBER
1, 2005; or",
with the text of the amendment set forth in italics.
REASONS FOR PROPOSALS
Recent regulatory, legislative and market developments point toward a more
competitive future in the electric and gas utility industry. CG&E shares that
view and believes that increased competition is not only a foregone conclusion,
but that the next several years are likely to be dynamic and potentially trying
times in our industry.
As competition intensifies, flexibility and cost leadership will be even
more crucial to success in the future. Given that the electric and gas industry
is extremely capital intensive, controlling and minimizing financing costs are
essential ingredients to operating effectively in the new competitive
environment. It is, therefore, for those two reasons, flexibility and cost
leadership, that you are being asked to vote in favor of the above proposals.
CG&E believes that adoption of Proposal 1 is key to meeting the objectives
of flexibility and cost leadership. Proposal 1, if adopted, would eliminate the
current provision of CG&E's Articles that limits the total amount of CG&E's
unsecured indebtedness to 20% of the total amount of CG&E's secured
indebtedness, plus capital and surplus. Historically, CG&E's debt financing
generally has been accomplished through the issuance of long-term first mortgage
bonds and a modest amount of short-term debt. First mortgage bonds represent
secured indebtedness because they place a first priority lien on substantially
all of CG&E's assets. The First Mortgage Indenture between CG&E and its
bondholders contains certain restrictive covenants with respect to, among other
things, the disposition of assets and the ability to issue additional first
mortgage bonds. Short-term debt, usually the lowest cost debt available to CG&E,
represents one type of unsecured indebtedness.
Inasmuch as the 20% restriction contained in the Articles limits CG&E's
flexibility in planning and financing its business activities, CG&E believes it
ultimately will be at a competitive disadvantage if the restriction is not
eliminated. The industry's new competitors (for example, power marketers,
independent power producers, and cogenerating facilities) generally are not
subject to the type of financing restrictions as the Articles impose on CG&E.
Other utilities, with the same or similar charter restrictions, have or are
5
<PAGE>
soliciting their shareholders for the same or similar amendments. Even CG&E's
Indiana affiliate, PSI Energy, has no comparable provision in its articles. And
although CG&E's current low-cost structure has been instrumental in undercutting
the ability of other competitors to lure away our large bulk power customers, we
must continue to explore new ways of reducing costs and enhancing flexibility.
CG&E believes that the adoption of Proposal 1 will be in the best long-term
competitive interests of shareholders by enhancing its ability to meet the two
objectives described below.
FINANCIAL FLEXIBILITY
CG&E believes that in the long run, various types of unsecured debt products
will grow in importance as an option in financing its construction program and
refinancing high-cost mortgage bonds. The availability and flexibility of
unsecured debt is necessary to take full advantage of changing conditions in
securities markets. CG&E intends to continue to rely on unsecured debt up to the
20% maximum currently allowable under the Articles. In addition, although CG&E's
earnings currently are sufficient to meet the earnings coverage tests that must
be satisfied before issuing additional first mortgage bonds and preferred stock,
there have been periods, including virtually all of the year 1994, when, because
of its inability to meet the Articles test, CG&E was unable to issue any
additional preferred stock. A similar inability to issue preferred stock in the
future combined with the inability to issue additional unsecured debt, would
limit CG&E's financing options to either additional first mortgage bonds
(assuming that earnings coverage test could be met) or additional common stock.
CG&E's use of unsecured short-term debt is subject to the 20% provision
contained in the Articles. CG&E believes that the prudent use of such debt is
vital to effective financial management of the business. Not only is unsecured
short-term debt virtually always the least expensive form of capital, it also
provides flexibility in meeting seasonal fluctuations in cash requirements, acts
as a bridge between issues of permanent capital, and can be used when
unfavorable conditions prevail in the market for long-term capital.
With these benefits in mind, CG&E this year sought and received the approval
of the Public Utilities Commission of Ohio to increase the maximum amount of
short-term debt it is permitted to have outstanding from $200 million to $400
million. However, because of the 20% restriction of the Articles, CG&E is
estimated to be permitted to have only $150 million of short-term debt capacity
available, based on capitalization estimated as of December 31, 1995. Beyond
that, the amount of short-term debt available to CG&E will continue to decline
as additional unsecured long- and short-term debt is issued.
LOWER COSTS
As previously mentioned, CG&E's short-term debt issuances represent the
lowest-cost form of financing. The Merger has resulted in a combined company
that is larger and financially stronger than either CG&E or PSI Energy would
have been on a stand-alone basis. This has allowed CG&E to reassess its
historically modest use of short-term debt. By increasing its use of short-term
debt, CG&E may be able
6
<PAGE>
to lower its cost structure even further, thereby making its product more
competitive, increasing earnings and reducing its business risks. But with the
Articles' 20% restriction in place, and as CG&E increasingly relies on unsecured
debt, the availability and concomitant benefits of short-term debt diminish. And
although short-term debt, by its nature, exposes the borrower to potentially
more volatility in interest rates, it should be noted that the cost of
short-term debt almost never exceeds the cost of permanent capital.
It is for all the above reasons that CG&E's Board believes the best
long-term interests of shareholders are served by, and encourages shareholders
to vote FOR, the adoption of Proposal 1.
Finally, Proposal 2 will be considered only if Proposal 1 is not approved.
Proposal 2 is in all respects identical to Proposal 1 in financial effect and
economic benefit to CG&E and its shareholders, except that it would permit the
issuance of unsecured debt in excess of the Articles' existing limitation for a
period of ten years only. While CG&E's Board recommends that shareholders vote
in favor of Proposals 1 and 2, the CG&E Board believes Proposal 1 is preferable
to Proposal 2 so that the expense of possibly conducting another proxy
solicitation for another meeting and vote of shareholders to further extend the
authorization granted, if Proposal 2 is adopted, can be avoided.
FINANCIAL AND OTHER INFORMATION
The financial statements of CG&E and related information included in its
Annual Report on Form 10-K for the year ended December 31, 1994, and its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995 and June
30, 1995, each as filed with the SEC, are hereby incorporated by reference. CG&E
will provide without charge, upon the written or oral request of any person
(including any beneficial owner) to whom this Proxy Statement is delivered, a
copy of such information (excluding certain exhibits). Such requests for
information should be directed to CG&E's principal office at 139 East Fourth
Street, Cincinnati, Ohio 45202, Attention: Corporate Secretary; telephone (513)
381-2000.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee of Cinergy's board of directors,
this board employed on January 25, 1995 Arthur Andersen LLP as independent
public accountants for Cinergy and its subsidiaries, including CG&E, for the
year 1995. Representatives of Arthur Andersen LLP are expected to be present at
the Special Meeting with the opportunity to make a statement if they desire to
do so, and will be available to respond to appropriate questions.
By Order of the Board of Directors
CHERYL M. FOLEY
SECRETARY
Dated: September 28, 1995
7
<PAGE>
[LOGO]
------------
NOTICE
AND
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 20, 1995
------------
THE CINCINNATI GAS & ELECTRIC COMPANY
139 EAST FOURTH STREET
CINCINNATI, OHIO 45202
[LOGO]
Printed on recycled paper.
[RECYCLED PAPER LOGO]
<PAGE>
PROXY THE CINCINNATI GAS & ELECTRIC COMPANY PROXY
The undersigned hereby appoints Jackson H. Randolph, James E. Rogers,
and George H. Stinson, or any of them, as proxies, each with the power to
appoint his substitute, and hereby authorizes them to represent and to vote as
designated hereon and in their discretion with respect to any other business
properly brought before the Special Meeting, all the shares of cumulative
preferred stock of The Cincinnati Gas & Electric Company ("CG&E") which the
undersigned is entitled to vote at the Special Meeting of Shareholders to be
held on November 20, 1995 or any adjournment(s) or postponements(s) thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. This proxy
when properly executed will be voted in the manner directed herein by the
undersigned shareholder(s). If no direction is made, the proxy will be voted
"FOR" Item 1 and "FOR" Item 2.
Indicate your vote by an (X). The Board of Directors recommends voting
FOR Item 1 and FOR Item 2.
ITEM
- ----
1. Removing from the Amended Articles of Incorporation ARTICLE FOURTH,
Clause 6-A(b), limiting CG&E's ability to issue unsecured indebtedness.
/ / FOR / / AGAINST / / ABSTAIN
2. In the event Proposal 1 is not adopted, amending ARTICLE FOURTH, Clause
6-A(b), to authorize CG&E to issue or assume unsecured indebtedness in
excess of 20% of CG&E's secured indebtedness, plus capital and surplus,
until December 1, 2005.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE AND RETURNED PROMPTLY
IN THE ENCLOSED ENVELOPE.)
<PAGE>
SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN ACCORDANCE
WITH INSTRUCTIONS APPEARING ON THE PROXY. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
Please check box if
you plan to attend / /
the Special Meeting.
Signature(s): Dated , 1995
------------------------------ -----------------------
Please sign exactly as name(s) appear on this proxy, and date
this proxy. If joint account, each joint owner should sign.
If signing for a corporation or partnership or as agent,
attorney or fiduciary, indicate the capacity in which you are
signing.
