Consumers Water Company
DIVIDEND REINVESTMENT AND
COMMON SHARE PURCHASE PLAN
--------------------
The Dividend Reinvestment and Common Share Purchase Plan, as amended (the
"Plan"), of Consumers Water Company (the "Company") provides shareholders of the
Company with a simple and convenient method of purchasing additional common
shares, without payment of any brokerage commission or service charge. Any
holder of record of common or preferred shares of the Company is eligible to
join the Plan. Participants who are already enrolled in the Plan will continue
to participate in the Plan without any further action on their part.
Holders of the Company's common and/or preferred shares who elect to
participate may:
-- Have cash dividends on all or some of their shares automatically
reinvested in additional common shares at current market prices;
-- Make optional cash investments of not less than $10 per Cash
Investment Date nor more than $50,000 per calendar year;
-- Have shares held under the Plan for safekeeping only, provided that
no optional cash investments may be made by participants who do not
have dividends reinvested under the Plan.
The price of common shares purchased directly from the Company for
participants in the Plan will be the average of the closing prices for the
Company's common shares as quoted on the Nasdaq Stock Market ("Nasdaq") for each
of the last five trading days up to and including the date as of which the
investment is made or, if no such closing prices are quoted by Nasdaq, as
determined in accordance with a method adopted by the Company. The Dividend
Investment Dates are the dividend payment dates and the Cash Investment Dates
are the first days of every month.
The price of common shares purchased in the open market or through
negotiated transactions will be the weighted average price for all shares
purchased by the Agent for the Plan during the Investment Period. The Investment
Period is the 30-day period beginning on the Dividend Investment Date or Cash
Investment Date.
This Prospectus relates to 500,000 common shares of the Company. It is
suggested that this Prospectus be retained for future reference.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is January 21, 1997
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the Public Reference Room of the
Commission, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the
Commission's regional offices at 500 West Madison Street, Suite 1400, Chicago,
IL 60661 and 7 World Trade Center, Suite 1300, New York, New York 10048; and
copies of such material can be obtained from the Public Reference Section of the
Commission, Washington, DC 20549, at prescribed rates. Information, as of
particular dates, concerning directors and officers of the Company, their
remuneration, and any material interest of such persons in transactions with the
Company is disclosed in proxy statements distributed to shareholders of the
Company and filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the
following documents and information heretofore filed with the Commission (File
No. 0-493):
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1995, filed pursuant to the 1934 Act.
2. The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996, June 30, 1996 and September 30, 1996 filed pursuant
to the 1934 Act.
3. The Company's definitive Proxy Statement dated March 29, 1996 in
connection with its Annual Meeting of Stockholders, filed pursuant to the
1934 Act.
4. The description of the common shares which is contained in the
Registration Statement on Form 10 filed under the 1934 Act, including any
amendment or report filed for the purpose of updating such description
under the 1934 Act.
All reports and other documents filed by the Company pursuant to Section
13, 14 or 15(d) of the 1934 Act after the date of this Prospectus and prior to
the termination of this offering of common shares shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such reports and documents.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written request of any
such person, a copy of any or all of the documents referred to above which have
been or may be incorporated by reference in this Prospectus, other than exhibits
to such documents, unless such exhibits are specifically incorporated by
reference in such documents. Written requests for such copies should be directed
to Consumers Water Company, P.O. Box 599, Portland, ME 04112, Attention:
Shareholder Services.
THE COMPANY
The Company is a holding and management company. Its principal business is
the ownership and operation, through subsidiary companies, of systems for the
collection, treatment and distribution of water for public and private use to
industrial, commercial and residential consumers, to other utilities for resale
and for private and municipal fire protection purposes. The Company owns
directly or indirectly at least 90% of the voting shares of 8 water companies
which operate 27 separate systems providing water service to approximately
223,000 customers in six states. It also owns 100% of Consumers Applied
Technologies, Inc., which provides services primarily in the areas of meter
installation, environmental engineering, corrosion engineering, contract
operations and water conservation.
The Company's water subsidiaries are the principal source of consolidated
net income from operations. The Company's five largest water subsidiaries,
Consumers Ohio Water Company; Consumers Pennsylvania Water Company--Shenango
Valley Water Division; Consumers Illinois Water Company; Consumers New Jersey
Water Company; and Consumers Pennsylvania Water Company--Roaring Creek Division
accounted for approximately 84% of consolidated operating revenues of the water
utilities and 84% of consolidated water net utility plant in 1995. The Company's
water subsidiaries operate under regulations imposed by the respective state
utility regulatory agencies where they carry on their operations.
The Company was incorporated under the laws of Maine in 1926. Its
executive offices are located at Three Canal Plaza, Portland, Maine 04101, its
mailing address is P.O. Box 599, Portland, Maine 04112, and its telephone number
is (207) 773-6438. Inquiries regarding the Plan may be made to the Company's
Shareholder Services Department at the same address, or by calling (800)
292-2925.
DESCRIPTION OF THE PLAN
The Company has had a dividend reinvestment plan for some time. The Plan
as described herein is an amended form of the Company's Economic Recovery Tax
Act of 1981 Qualified Dividend Reinvestment and Common Share Purchase Plan.
The following is a question and answer statement of the provisions of the
Plan, as amended. It summarizes certain provisions of the Plan and is qualified
in its entirety by reference to the Plan which is filed as an exhibit to the
registration statement.
Purpose
1. What is the purpose of the Plan?
The purpose of the Plan is to provide holders of record of the Company's
common and preferred shares with a convenient method of investing cash dividends
and optional cash investments in additional common shares of the Company without
payment of any brokerage commission or service charge. When common shares are
purchased under the Plan directly from the Company, the Company will receive
additional equity funds which will be made available to its subsidiaries for
capital expenditures for extensions, additions and improvements to utility
plant, or applied toward payment of indebtedness of the Company or its
subsidiaries incurred for such expenditures or used for potential acquisitions
or for the Company's other corporate purposes. See "Use of Proceeds".
Advantages
2. What are the advantages of the Plan?
Participants in the Plan may (a) have cash dividends on all of their
common and/or preferred shares automatically reinvested in common shares and in
addition make optional cash investments, (b) have cash dividends on only a
portion of their common and/or preferred shares automatically reinvested in
common shares and in addition make optional cash investments, or (c) have shares
held under the Plan for safekeeping only, provided that no optional cash
investments may be made by participants who do not have dividends reinvested
under the Plan. Cash dividends upon shares which are not to be reinvested are
paid directly to the participant for whose benefit such shares are held.
Optional cash investments may be made on a monthly basis in amounts from
$10 minimum per Cash Investment Date to $50,000 maximum per calendar year. No
commission or service charge is paid by participants in connection with
purchases under the Plan. Full investment of funds is possible under the Plan
because the Plan permits fractions of shares, as well as full shares, to be
credited to participants' accounts. In addition, dividends on fractions of
shares, as well as full shares, will be credited to participants' accounts. The
Company will provide simplified record keeping for shares held by the Agent (as
defined below) on behalf of participants under the Plan.
The Plan also provides, at no cost to the participant, for the safekeeping
of share certificates of all participants by the Agent.
Administration
3. Who administers the Plan?
The Company has appointed First Union National Bank of North Carolina (the
"Agent") to hold shares purchased under the Plan on behalf of participants and
make open market and negotiated purchases of shares as agent for participants.
The Company will administer the Plan and keep a continuous record of each
participating shareholder's activities and send a statement of account to each
participant following each purchase of shares to be held by the Agent on that
participant's behalf.
Participation
4. Who is eligible to participate?
All holders of record of common and/or preferred shares of the Company are
eligible to participate in the Plan. Beneficial owners of common or preferred
shares whose shares are registered in names other than their own must arrange
with the shareholders of record for participation. To facilitate this, the
Company will provide forms for brokers and bank nominees to participate, after
signing a contract, on a dividend-by-dividend basis on behalf of beneficial
owners. If for any reason a beneficial owner is unable to arrange participation
with his broker or bank nominee, the owner must become a record holder by having
the shares transferred to the owner's name.
5. How does an eligible shareholder participate?
A holder of record of common or preferred shares may join the Plan by
checking the appropriate box on the Authorization Form and signing and returning
it to the Company. A postage-paid, pre-addressed envelope is provided for this
purpose. An Authorization Form may be obtained by a shareholder at any time by
written request to the Company at P.O. Box 599, Portland, Maine 04112,
Attention: Shareholder Services, or by calling the Shareholder Services
Department of the Company at (800) 292-2925.
In all cases, an Authorization Form or written notification of other
instructions must be signed by or on behalf of all owners of record. When shares
are held by joint tenants, all should sign. When an Authorization Form or
written notification is signed by an executor, administrator, trustee or
guardian, or as attorney, the capacity in which the Authorization Form or
notification is signed must be specified. An Authorization Form or written
notification of a corporate or other organizational owner should be signed by an
authorized officer or other official, identified as such.
6. When may a shareholder join the Plan?
A holder of record of the Company's common or preferred shares may join
the Plan at any time. If the Authorization Form is received by the Company after
the fifth business day preceding a Dividend Investment Date, reinvestment of
dividends will not begin until the next following dividend. However, the Company
in its absolute discretion may accept an Authorization Form received after the
fifth business day preceding a Dividend Investment Date but before the Dividend
Investment Date. Dividends on the common shares are normally payable on the
twenty-fifth day of February, May, August and November. Dividends on the
preferred shares are normally payable on the first day of January, April, July
and October. The record date, from which entitlement to common and/or preferred
dividends is determined, is generally from ten to twenty days preceding the
payment date.
7. What does the Authorization Form provide?
By means of the Authorization Form a shareholder may participate in the
Plan through the following options:
A shareholder checking the "Full Dividend Reinvestment" box directs
the Company to provide for the investment in additional common shares to
be held by the Agent on the shareholder's behalf (i) cash dividends on all
of the common and/or preferred shares registered in the shareholder's name
as well as on all of the shares credited to the shareholder's account
under the Plan and (ii) any optional cash investment made within the
limits described in Question 14 below.
A shareholder checking the "Partial Dividend Reinvestment" box and
(i) designating in the appropriate space the number of common or preferred
shares registered in the shareholder's name on which cash dividends are to
continue to be received, directs the Company to provide for the investment
in additional common shares to be held by the Agent on the shareholder's
behalf cash dividends on the remaining number of common or preferred
shares registered in the shareholder's name as well as on all of the
shares to be credited to the shareholder's account under the Plan or (ii)
designating the amount of dividends which are to continue to be paid in
cash, directs the Company to provide for the investment in additional
common shares to be held by the Agent on the shareholder's behalf cash
dividends, if any, in excess of the amount specified and payment to such
shareholder of cash dividends up to the amount specified. Shareholders who
have dividends reinvested under the Plan may also make optional cash
investment within the limits described in Question 14 below.
A shareholder checking the "safekeeping only" box on the
Authorization Form provides for the safekeeping of any shares held on
behalf of that shareholder under the Plan and the payment of cash
dividends on such shares directly to the participant. Optional cash
investments may be made only by participants who have dividends reinvested
on some or all of their shares in the Plan. Participants who have elected
the "safekeeping only" option and wish to have all or a portion of their
dividends reinvested or to make optional cash investments must provide the
Company with a new Authorization Form with the appropriate box checked
off.
If a signed Authorization Form is returned to the Company without one of
the boxes checked, the shareholder will be enrolled under the "Full Dividend
Reinvestment" option. If a signed Authorization Form is returned to the Company
with the "Partial Dividend Reinvestment" box checked but without the number of
shares designated, the form will be returned to the shareholder for completion.
Cost
8. Are there any expenses to participants in connection with purchases under the
Plan?
No. All costs of administration of the Plan are to be paid by the Company.
There will be no service charges. There will be no brokerage commissions when
shares are purchased under the Plan. In the event a participant withdraws from
the Plan and requests the Company to instruct the Agent to sell the
participant's shares held by the Agent pursuant to the Plan, the participant
will be charged a brokerage commission on the sale and any transfer tax.
Purchases
9. What is the source of shares purchased under the Plan?
Shares may be purchased under the Plan directly from the Company's
authorized but unissued common shares, from the Company's treasury shares, by
the Agent on the open market or in negotiated transactions, or a combination of
the foregoing. The decision as to whether to purchase shares directly from the
Company, from the Company's treasury shares, on the open market or in negotiated
transactions will take into account the Company's need for common equity,
general market conditions, and any other factors considered to be relevant.
10. What will be the price of the common shares purchased under the Plan?
The price of the common shares purchased directly from the Company under
the Plan will be the average of the closing prices for the Company's common
shares as quoted on the Nasdaq Stock Market on the Dividend Investment Date or
Cash Investment Date and each of the preceding four trading days. If there is no
substantial trading in the Company's common shares for any day in the five-day
period, or if Nasdaq does not issue any quotations of the Company's common share
transactions for any day in the five-day period, the purchase price shall be
determined by the Company on the basis of such market quotations or other method
as the Company deems appropriate.
The purchase price of common shares purchased on the open market or in
negotiated transactions will be the weighted average price for all shares
acquired by the Agent for the Plan during the 30-day Investment Period. The
Investment Period is the 30-day period beginning on the Dividend Investment Date
or Cash Investment Date.
11. How many common shares will be purchased for participants?
The number of shares to be purchased depends on the amount of the
participant's reinvested dividends or optional cash investments, and on the
price of the common shares. Each participant's account will be credited with a
number of shares, including fractions computed to three decimal places, equal to
the total amount to be invested divided by the purchase price.
12. When shall purchases of common shares be made?
Purchases of common shares from the Company shall be made as of the
Dividend Investment Date or Cash Investment Date. The Dividend Investment Date
is each of the common share dividend payment dates and the preferred share
dividend payment dates. The Cash Investment Dates are the first days of each
month.
Purchases of common shares in the open market or in negotiated
transactions shall be made by the Agent within the 30-day Investment Period,
subject to applicable requirements of federal or state securities laws affecting
the timing and manner of purchases of common shares for the Plan. Common shares
purchased on the open market or in negotiated transactions will be credited to
participants' accounts as of the last day of the Investment Period or as of the
date on which all purchases for the Investment Period are completed.
Subject to any limitations imposed by federal or state securities laws,
the Agent will have full discretion as to all matters relating to open market
purchases, including determination of the number of shares, if any, to be
purchased on any day or at any time of day, the price paid for such shares, the
markets on which such shares are to be purchased (including in the
over-the-counter market or in negotiated transactions) and the persons
(including other brokers and dealers) from or through whom such purchases are
made. The Company reserves the right to designate an independent broker to
purchase the stock on the open market.
The transfer of shares to participants' accounts under the Plan will be
made as of the Dividend Investment Date or Cash Investment Date, or as of the
last day of the Investment Period but, for administrative reasons, may not be
effected until up to fourteen days after the related Dividend Investment Date or
Cash Investment Date, or last day of the Investment Period.
No interest will be paid by the Company or the Agent on cash dividends or
optional cash investments held under the Plan.
Optional Cash Investments
13. How do optional cash investments work?
Optional cash investments received by the Company from a participant who
has dividends reinvested under the Plan on or prior to the fifth business day
preceding a Cash Investment Date will be applied to the purchase of additional
common shares as of that Cash Investment Date. However, the Company in its
absolute discretion may accept an optional cash investment received after the
fifth business day preceding a Cash Investment Date but before the Cash
Investment Date and apply it on that Cash Investment Date. The price of the
common shares purchased with optional cash investments will be the price
described in Question 10 above. No interest will be paid by the Company or the
Agent on optional cash investments held under the Plan. Consequently,
participants are strongly urged to make their optional cash investments shortly
before a Cash Investment Date. However, participants should allow sufficient
time to ensure that their investment is received by the Company on or prior to
the fifth business day preceding a Cash Investment Date. Optional cash
investments should only be sent to the address indicated on the Cash Investment
Forms to be provided to participants in the Plan. Deliveries to any other
address do not constitute valid delivery.
14. How may optional cash investments be made?
An optional cash investment may be made by a participant who has dividends
reinvested under the Plan by enclosing a check made payable to Consumers Water
Company with a Cash Investment Form to be provided by the Company. Optional cash
investments may be made through the use of the Cash Investment Forms, sent by
the Company to participants or by providing the Company with written
instructions in a form acceptable to it containing the same information required
by the Cash Investment Form. The same amount of money need not be sent each
month, and there is no obligation to make an optional cash investment for each
or any Cash Investment Date. A Cash Investment Form may be obtained by a
participant in the Plan at any time by written request to the Company at P.O.
Box 599, Portland, Maine 04112, Attention: Shareholder Services, or by calling
the Shareholder Services Department of the Company at (800) 292-2925.
Optional cash investments, if made, may not be less than $10 per Cash
Investment Date. The maximum optional cash investment is $50,000 per calendar
year. Optional cash investments will be refunded if a written request for refund
is received by the Company at least five business days prior to the Cash
Investment Date on which the cash investment otherwise would have been made.
However, the Company in its absolute discretion may accept a written request for
refund received after the fifth business day preceding a Cash Investment Date
but before the Cash Investment Date.
Reports to Participants
15. How will participants be advised of their purchase of shares?
As soon as practicable after each purchase a participant will receive a
statement reflecting the purchase. These statements are a participant's
continuing record of the cost of purchases under the Plan and should be retained
for tax purposes. In addition, each participant will receive a Prospectus
relating to the Plan, and copies of the same communications sent to every other
shareholder, including the quarterly reports, annual report, notice of
shareholders' meeting and proxy statement, and income tax information for
reporting dividends paid and shares sold.
Dividends on shares held under the Plan
16. Will Participants be credited with dividends on shares held in their
accounts under the Plan?
Yes. The Company pays dividends, as declared, to the record holders of all
its shares. As the record holder for participants, the Agent will be entitled to
receive dividends for all shares credited to participants' accounts on the
record date. The Company will credit such dividends to participants on the basis
of full and fractional shares held in their accounts, and, for dividends which
are to be reinvested, will issue common shares to the Agent with respect to
participants' shares subject to the Plan or instruct the Agent to make open
market or negotiated purchases in accordance with the Plan with cash dividends
paid to the Agent. Cash dividends on shares held under the Plan which a
participant has elected not to reinvest will be paid directly to the
participant.
Certificates for Shares
17. Will share certificates be issued for common shares purchased?
Normally, certificates for common shares purchased under the Plan will not
be issued to participants. The number of shares credited to an account under the
Plan will be shown on the participant's statements of account. This additional
service protects against loss, theft or destruction of stock certificates.
Certificates for any number of shares, up to the number of full shares
credited to an account under the Plan, will be issued upon written request of a
participant even though such participant wishes to remain in the Plan. This
request should be mailed to the Company at P.O. Box 599, Portland, Maine 04112,
Attention: Shareholder Services. Any remaining full shares and fractional share
will continue to be credited to the participant's account.
Shares credited to the account of a participant under the Plan may not be
pledged. A participant who wishes to pledge such shares must request that
certificates for such shares be issued in the participant's name.
Certificates for a fractional share will not be issued under any
circumstance.
18. In whose name will accounts be maintained and certificates registered when
issued?
Accounts for participants will be maintained by the Company in the
participants' names as shown on the Company's records at the time the
participants enter the Plan. When issued, certificates for full shares will be
registered in the account name.
Upon written request, certificates also can be registered and issued in
names other than the account name subject to compliance with any applicable laws
and the payment by the participant of any applicable taxes, provided that the
certificate or stock power bears the signature of the participant and the
signature is guaranteed by an eligible guarantor institution which is a member
of, or participant in, a signature guarantee program within the meaning of Rule
17Ad-15 promulgated under the Securities Exchange Act of 1934. The term
"eligible guarantor institution" includes banks, registered securities brokers,
credit unions and savings associations who participate in such a program.
Changing Method of Participation and Withdrawal
19. How does a participant change his or her method of participation?
A participant may change his or her method of participation at any time by
completing an Authorization Form and returning it to the Company at P.O. Box
599, Portland, Maine 04112, Attention: Shareholder Services. An Authorization
Form and postage paid envelope may be obtained as stated in Question 5. The
amount of dividends to be reinvested as of the next Dividend Payment Date shall
be in accordance with such later-dated Authorization Form if it is received by
the Company by the date upon which such dividend is declared, but shall be the
amount indicated in the original Authorization Form if it is received after such
date. However, the Company in its absolute discretion may accept such a
later-dated Authorization Form received after the date upon which a dividend is
declared, but before the payment date for such dividend. A participant who
provides the Company with a later-dated Authorization Form in which the
participant elects the safekeeping only option may not make optional cash
investments and any optional cash investment held by the Company for application
on the next succeeding Cash Investment Date shall be returned to the
participant, unless such later-dated Authorization Form is received after the
fifth business day preceding the next Cash Investment Date. However, the Company
in its absolute discretion may in the event that such a later-dated
Authorization Form is received after the fifth business day before a Cash
Investment Date return to the participant any moneys otherwise being held for
application on such Cash Investment Date.
20. May a participant withdraw from the Plan?
Yes. The Plan is entirely voluntary and a participant may withdraw at any
time. In order to withdraw from the Plan, a participant must provide the Company
with a properly executed Plan Withdrawal Form or other written instruction, in a
form acceptable to the Company, containing the same information required by the
Plan Withdrawal Form.
If the request to withdraw is received by the Company after the date upon
which a dividend is declared, but before the Dividend Investment Date upon which
such dividend is to be paid, it shall not be effective until after the Dividend
Investment Date. Thereafter all dividends will be paid in cash to the
shareholder. A shareholder may elect to re-enroll in the Plan at any time. A
participant who has withdrawn from the Plan may not make optional cash
investments, and any optional cash investment held by the Company for
application on the next succeeding Cash Investment Date shall be returned to the
withdrawing participant, unless such withdrawal request is received after the
fifth business day preceding the next Cash Investment Date, in which case the
withdrawal shall be effective after the next Cash Investment Date. However, the
Company in its absolute discretion may accept a request for withdrawal received
after the fifth business day preceding the next Cash Investment Date but before
the Cash Investment Date and return to the withdrawing participant any moneys
otherwise being held for application on such Cash Investment Date.
As described in Question 17, certificates for any number of shares up to
the number of full shares credited to a participant's account under the Plan
will be issued to a participant upon request.
21. How does a participant withdraw from the Plan?
In order to withdraw from the Plan, a participant must provide the Company
with a properly executed Plan Withdrawal Form or other written instruction, in a
form acceptable to the Company, containing the same information required by the
Plan Withdrawal Form. Plan Withdrawal Forms should be addressed to the Company
at P.O. Box 599, Portland, Maine 04112, Attention: Shareholder Services. When a
participant withdraws from the Plan or upon termination of the Plan by the
Company, certificates for whole shares credited to the participant's account
under the Plan will be issued and a cash payment will be made for any fraction
of a share.
Upon withdrawal from the Plan, the participant may, if the participant
desires, request that all of the shares, both whole and fractional, credited to
the participant's account in the Plan be sold. If a participant requests that
such shares be sold, the sale will be made by the Agent in the market within ten
trading days after receipt of the request. The participant will receive the
proceeds of the sale less brokerage commissions, transfer tax and income tax
withheld, if any.
22. What happens to a fraction of a share when a participant withdraws from the
Plan?
When a participant withdraws from the Plan a cash adjustment representing
any fraction of a share will be mailed directly to the participant. The cash
payment will be based on the selling price of the whole shares or on the closing
price of the Common Stock on the business day on which the withdrawal request is
received by the Company as published in the Nasdaq Stock Market quotations in
the Eastern Edition of The Wall Street Journal.
Other Information
23. What happens when a participant sells or transfers all of the shares
registered in the participant's name?
If a participant disposes of all shares of stock registered in the
participant's name, the Company will, unless otherwise instructed by the
participant, continue to provide for the reinvestment of the dividends on the
shares held on the participant's behalf by the Agent under the Plan.
Participants who desire to dispose of all shares held on their behalf by the
Agent under the Plan must withdraw from the Plan as described in Question 21
above.
24. If the Company sells additional common shares through a rights offering, how
will the rights on Plan shares be handled?
In a rights offering, a participant will receive rights based upon shares
held of record and whole shares credited to the participant's account under the
Plan.
25. What happens if the Company declares a stock split or stock dividend?
Any split shares or stock dividend shares distributed by the Company on
shares credited to the account of a participant under the Plan will be added to
the shares held on the participant's behalf by the Agent.
26. How will a participant's shares held under the Plan be voted at meetings of
shareholders?
If shares registered in the name of a participant in the Plan are voted by
the participant on any matter submitted to a meeting of shareholders, the Agent
will vote shares held in the participant's account under the Plan in accordance
with the participant's proxy for the shares registered in the participant's
name. If no shares are registered in a participant's name, shares credited to
the account of a participant under the Plan will be voted in accordance with
instructions of the participant given on an instruction form which will be
furnished to the participant. If the participant desires to vote in person at
the meeting, a proxy for full shares credited to the participant's account under
the Plan may be obtained upon written request received by the Company at least
15 days before the meeting.
If no instructions are received on a returned proxy card or instruction
form, properly signed, with respect to any item thereon, all of the
participant's shares--those registered in the participant's name, if any, and
those credited to the participant's account under the Plan--will be voted in the
same manner as for non-participating shareholders who return proxies and do not
provide instructions: in accordance with the recommendations of the Company's
management. If the proxy card or instruction form is not returned or if it is
returned unsigned, none of the participant's shares will be voted unless the
participant votes in person.
27. What are the Federal Income Tax Consequences of Participation in the Plan?
(a) Treatment of Dividends Generally. In general, except as described
below, the federal income tax consequences to an individual or a corporate
participant in the Plan may be summarized as follows:
(i) With respect to reinvested cash dividends used to purchase
authorized but unissued common shares or treasury shares directly from the
Company, a participant will be treated for federal income tax purposes as
having received a distribution in an amount equal to the fair market value
on the dividend payment date of the full number of common shares and any
fractional share distributed on that date. The fair market value of such
shares on the dividend payment date will be treated as dividend income to
the participant. The basis of the shares so purchased will be equal to the
fair market value of such shares on the dividend payment date.
(ii) With respect to reinvested cash dividends used by the Agent to
purchase shares for participants in the open market or in negotiated
transactions upon instruction from the Company, a participant will be
treated for federal income tax purposes as having received a dividend
distribution in an amount equal to the cash reinvested plus any brokerage
commissions paid by the Company to obtain the shares. The basis of the
shares so purchased will be equal to the amount treated as a dividend
distribution to the participant.
(iii) A participant who purchases common shares with optional cash
investments will recognize no taxable income upon such purchases except to
the extent of any brokerage commissions paid by the Company. The basis of
shares purchased in this manner will be the amount of the optional cash
investment plus brokerage commissions.
(iv) Generally, a corporation may deduct 70% of the dividends
received or accrued from a domestic corporation.
(v) A participant's holding period for common shares acquired
pursuant to the Plan will begin on the day following the date the shares
are credited to the participant's account.
(vi) A participant will not realize taxable income as a result of
receipt of certificates for whole common shares credited to the
participant's account, either upon the participant's request for those
shares or upon withdrawal from participation in or termination of the
Plan.
(vii) A participant will realize gain or loss when the common shares
are sold or exchanged, and, in the case of a fractional share, when the
participant receives a cash payment for a fraction of a common share
credited to the participant's account upon termination of participation in
or termination of the Plan. The amount of such gain or loss will be the
difference between the amount which the participant receives for the
shares or fraction of a share and the tax basis therefor.
(viii) For participants who are subject to federal and/or state
income tax withholding, the Company will provide for the investment in
common shares an amount equal to the dividends less the amount of federal
and state income tax required to be withheld by the Company.
(b) Withholding on Dividends Paid. Payors of reportable dividends and
reportable proceeds from the redemption or sale of shares are required to
withhold federal income tax equal to 31% from amounts paid or credited to the
accounts of nonexempt payees who have failed to furnish the payor with
information relating to their federal income tax status, including their correct
taxpayer identification numbers as certified on a Form W-9 or a substitute
therefor acceptable to the Company in accordance with applicable Regulations of
the Internal Revenue Service. Several states have similar state income tax
withholding requirements that may apply. If a participant is subject to the 31%
federal withholding or any applicable state withholding, the Company will deduct
the amount required to be withheld from such dividends or proceeds before such
dividends are used to purchase shares from the Company or paid to the Agent to
be used for the purchase of shares in the open market or in negotiated
transactions. Payments of dividends and proceeds to nonexempt persons and
amounts, if any, of tax withheld will be reported to the Internal Revenue
Service and the applicable states by the Company as required by law.
In the case of a foreign shareholder whose dividends are subject to United
States income tax withholding and any applicable State income tax withholding,
the amount of the tax to be withheld will be deducted from the amount of
dividends to determine the amount of dividends to be reinvested. The statements
confirming purchases made for foreign participants will indicate the amount of
tax withheld. The taxation of foreign shareholders is complicated, and, except
as noted, is not discussed in this Prospectus. Accordingly, Plan participants
should consult with their own tax advisors with respect to federal and foreign
tax consequences of participation in the Plan.
(c) Consultation with Tax Advisor Urged. All participants are urged to
consult their own tax advisors to determine the particular tax consequences
which may result from their participation in the Plan and the subsequent
disposal by them of shares purchased pursuant to the Plan. The income tax
consequences for participants who do not reside in the United States will vary
from jurisdiction to jurisdiction.
28. May the Plan be changed or discontinued?
While the Company hopes to continue the Plan indefinitely, the Company
reserves the right to amend, suspend, modify or terminate the Plan at any time.
Notice of any such amendment, suspension, modification or termination will be
sent to participants.
29. What is the responsibility of the Company and the Agent under the Plan?
The Company and the Agent will not be liable for any act done in good
faith or for any good faith omission to act, including, without limitation, any
claim of liability arising out of failure to terminate a participant's account
upon participant's death prior to receipt of notice in writing of such death, or
with respect to the prices at which shares are purchased for the participant's
account and the times when the purchases are made, or with respect to any
fluctuation in the market value after purchase or sale of shares.
The participant should recognize that neither the Company nor the Agent
can assure the participant of a profit or protect against a loss on the shares
purchased under the Plan.
30. Who interprets and regulates the Plan?
The terms and conditions of the Plan and its operation shall be governed
by and construed in accordance with the laws of the State of Maine. The Company
reserves the right to interpret and regulate the Plan as may be necessary or
desirable in connection with the operation of the Plan.
USE OF PROCEEDS
The Company does not know whether all of the common shares covered by this
Prospectus will be sold or the exact prices at which they will be sold. The net
proceeds from the purchase of common shares directly from the Company will be
used for capital expenditures for extensions, additions and improvements to the
utility plant and properties of the Company's subsidiaries or for the payment of
obligations of the Company or its subsidiaries incurred for such expenditures,
for potential acquisitions and for the other general corporate purposes. The
Company will receive no proceeds from open market or negotiated purchases.
LEGAL OPINION
The validity of the additional common shares was passed upon for the
Company by its Counsel, Drummond Woodsum & MacMahon, 245 Commercial Street,
Portland, Maine. The consent of Drummond Woodsum & MacMahon to the use of its
opinion and to the reference to it in the Registration Statement was contained
in its opinion.
EXPERTS
The consolidated financial statements and schedules of the Company and its
subsidiaries which are incorporated herein by reference to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated herein by reference in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
================================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representation other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any of
these securities in any jurisdiction to any person to whom it is unlawful to
make such offer or solicitation in such jurisdiction.
================================================================================
================================================================================
Consumers
Water Company
Dividend Reinvestment
and
Common Share
Purchase Plan
Prospectus
January 21, 1997
================================================================================
