<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Sec. 240.14a-11(c) or
Sec. 240.14a-12
THE CINCINNATI GAS & ELECTRIC COMPANY
.....................................................................
(Name of Registrant as Specified In Its Charter)
THE CINCINNATI GAS & ELECTRIC COMPANY
.....................................................................
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
........................................................................
2) Aggregate number of securities to which transaction applies:
........................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
........................................................................
4) Proposed maximum aggregate value of transaction:
........................................................................
5) Total fee paid:
........................................................................
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
..........................
2) Form, Schedule or Registration Statement No.:
..........................
3) Filing Party:
..........................
4) Date Filed:
..........................
<PAGE>
The Cincinnati Gas & Electric Company
139 East Fourth Street
Cincinnati, Ohio 45202
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 _______________, 1995 at ________ a.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,
Jackson H. Randolph James E. Rogers
Chairman and Vice Chairman and
Chief Executive Officer Chief Operating Officer
<PAGE>
DRAFT
THE CINCINNATI GAS & ELECTRIC COMPANY
139 East Fourth Street
Cincinnati, Ohio 45202
__________________________
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON
_____________, 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 _____________, _______________, 1995 at
_____ a.m. , eastern standard time, for the purposes of:
(1)removing from the Amended Articles of Incorporation the
provision ARTICLE FOURTH, Clause 6-A(b), limiting CG&E's
ability to issue unsecured indebtedness;
(2)in the event Proposal (1) is not adopted, authorizing
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 capitalization 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
_________, ___________, 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: _____________, 1995
<PAGE>
DRAFT
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
__________, 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 ___________, 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 ________________, 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:
Class Shares Votes Per Share
Outstanding
Common Stock (Par Value 89,663,086 1 vote
$8.50 per share)
Cumulative Preferred 2,000,000 1 vote
Stock (Par Value $100
per share)
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 $8,500 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.
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.
Name and Address Amount and Nature Percent
of Beneficial Owner of Beneficial of
Ownership Class
U.S. Leasing International, 247,500 shares
Inc. 12.38%
733 Front Street
San Francisco, California
94111
Household Finance 105,000 shares 5.25%
Corporation
2700 Sanders Road
Prospect Heights, Illinois
60070
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:
Amount and Nature
Name of Beneficial Owner (1) of Beneficial Ownership
Jackson H. Randolph ______________ shares
James E. Rogers ______________ shares (2)
William J. Grealis ______________ shares
Directors and executive
officers as a group ______________ shares (3)
________________
(1) No individual beneficially owns more than 0.___% of the
outstanding shares of common stock of Cinergy.
(2) Includes _____ shares which Mr. Rogers has the right to
acquire within 60 days pursuant to the exercise of stock options.
(3) Includes _____ shares which respective director and/or
executive officer individually has the right to acquire within 60
days pursuant to the exercise of stock options.
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, 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 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 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. CG&E's Board urges shareholders to
vote in favor of Proposal 1 instead, so that the
expense of conducting another proxy solicitation and holding
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 offices 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
Cincinnati, Ohio
______________, 1995
<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 , 1995 or any adjournment(s) or
postponement(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.
