SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) April 23, 1997
Connecticut Energy Corporation
(Exact Name of Registrant as Specified in Charter)
Connecticut 1-8369 06-0869582
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
855 Main Street, Bridgeport, Connecticut 06604
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (800) 760-7776
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
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On April 23, 1997, the registrant (the "Company") filed Form S-3 for the
registration of 1,750,000 additional shares of Common Stock, par value $1.00
per share. The following is a description of the registrant's Common Stock
as provided in its Registration Statement:
The outstanding Common Stock of the Company is, and the Common Stock offered
hereby when issued and paid for will be, fully paid and non-assessable. The
following summary description of certain provisions of the Company's Amended
and Restated Certificate of Incorporation (the "Company's Certificate") does
not purport to be complete and is qualified in its entirety by reference to
said provisions.
The Company's Certificate authorizes 20,000,000 shares of Common Stock
having a par value of $1 per share, with 9,126,937 shares issued and
outstanding on April 1, 1997. The Company's Certificate also authorizes a
class of 1,000,000 shares of preference stock having a par value of $1 per
share. The Board of Directors is authorized to issue shares of the Company's
Common Stock and preference stock from time to time, without common
shareholder approval. To date, no shares of preference stock have been issued.
DIVIDEND RIGHTS
The Company is a holding company and a legal entity distinct from its
subsidiaries. The right of the Company and its shareholders to participate
in any distribution of the assets or earnings of any subsidiary (including
The Southern Connecticut Gas Company ("Southern")) is subject to the prior
claims of creditors and preferred shareholders of such subsidiary, except
to the extent that claims of the Company in its capacity as a creditor of
any subsidiary may be recognized.
Subject to the preferential rights of the Company's preference stock, if any
should be issued, dividends may be declared on the Common Stock out of the
funds legally available therefor. The major source of funds for payment of the
Company's dividends is dividends received on the shares of Southern's Common
Stock, all of which is owned by the Company. Southern's indenture relating to
long-term debt contains restrictions as to the declaration or payment of cash
dividends on, or the reacquisition of, capital stock. Under the most
restrictive of such provisions, $28,022,991 of Southern's retained earnings at
December 31, 1996 were available for such purposes. The Company's receipt of
dividends from Southern is subject to action by Southern's Board of Directors.
In addition, Southern's Certificate of Incorporation authorizes the issuance
of preference stock, but none has been issued.
VOTING RIGHTS
Each holder of the Common Stock is entitled to one vote for each share held
of record on the books of the Company. Shareholders do not have cumulative
voting rights with respect to the election of directors.
LIQUIDATION AND PREEMPTIVE RIGHTS
After satisfaction of the preferential liquidation rights of the Company's
preference stock, if any should be issued, the holders of the Common Stock are
entitled to share ratably in the distribution of all remaining assets.
The holders of the Common Stock have no preemptive rights.
PROVISIONS RELATING TO CHANGE IN CONTROL
The Company's Certificate and By-Laws contain provisions which could have
the effect of delaying, deferring or preventing a change in control of the
Company. Some of these provisions operate only with respect to an
extraordinary corporate transaction involving the Company, such as a merger,
reorganization, tender offer, sale or transfer of substantially all of its
assets, or liquidation. Provisions relating to the Company's Board of
Directors (1) divide the Board of Directors into three classes of directors,
as nearly equal in number as possible, serving for staggered three-year terms,
(2) provide that directors can only be removed for cause (as defined in the
Company's Certificate) upon the affirmative vote of (i) the Board of Directors
acting by not less than a majority of directorships or (ii) 80% of the
combined voting power of the then outstanding shares of all classes and series
of the Company's stock entitled to vote generally in the election of directors
("Voting Stock"), voting as a single class, (3) provide that vacancies on the
Board of Directors may only be filled by the affirmative vote of the majority
of the Board of Directors then in office, even though less than a quorum of
the Board, (4) require that written notice be given to the Board of Directors
of a shareholder's intention to nominate a director at least 90 days in
advance of an annual meeting of shareholders or, in the case of a special
shareholders' meeting, not later than the close of business on the seventh day
following the date on which notice of such meeting was first given to
shareholders, (5) require that a special shareholders' meeting shall only be
called by the affirmative vote of a majority of the Board of Directors, or by
the President or Chairman, unless otherwise required by law, (6) require that,
unless otherwise voted by the Board of Directors, notice shall be given to
shareholders at least 30 days in advance of any special shareholders' meeting,
(7) provide that shareholder action may only be taken at a meeting unless the
unanimous written consent of shareholders is obtained, (8) confirm that the
Board of Directors may consider, in exercising its judgment on any decision,
the impact of its decisions upon employees, customers and communities served
by Southern and Southern's ability to carry out its duties as a public service
company, (9) provide that, when recommended by two-thirds of the Disinterested
Directors (as defined in the Company's Certificate), the affirmative vote of
the holders of 80% of the combined voting power of the then outstanding shares
of the Voting Stock, voting as a single class, and the additional vote of a
majority of the Disinterested Shareholders (as defined in the Company's
Certificate), voting as a single class, shall be required to amend, repeal or
adopt provisions inconsistent with certain Articles of the Company's
Certificate concerning the vote of shareholders needed to approve certain
business transactions and to approve certain amendments to the Company's
Certificate, and (10) provide that the By-Laws may be adopted, repealed or
amended only upon the affirmative vote of (i) 80% of the combined voting
power of the then outstanding shares of Voting Stock, voting as a single
class, or (ii) the Board of Directors acting by not less than the majority
of the entire Board.
The Company's Certificate contains provisions designed to ensure that under
certain circumstances all shareholders receive a minimum price in the event of
a merger or certain other business combinations initiated by a holder of at
least 10% of the Voting Stock of the Company ("Interested Shareholder"). Under
these provisions, a business combination with an Interested Shareholder must
be approved by the holders of 80% of the voting power of the then outstanding
shares of Voting Stock, voting as a single class, and also by the holders of a
majority of such voting power not held by the Interested Shareholder unless
(i) such business combination shall have been approved by a majority of the
members of the Board who were directors before the purchaser became an
Interested Shareholder ("Disinterested Directors") and the Interested
Shareholder acquired his status as an Interested Shareholder in a manner
substantially consistent with an agreement or understanding approved by the
Board of Directors prior to the time such Interested Shareholder became an
Interested Shareholder, (ii) in the case of some business combinations,
approval is voted by a majority of Disinterested Directors, or (iii) certain
minimum price and procedural requirements are met. Under some circumstances,
when approval of the Disinterested Directors has been obtained, an amendment
to the Company's Certificate would require the approval of only a majority of
the voting power of the Voting Stock. In the case of a merger, consolidation
or sale of all or substantially all of the Company's assets approved by the
Disinterested Directors, the Connecticut Business Corporation Act (the "CBCA")
requires the vote of the holders of two-thirds of the voting power of the
Voting Stock. The CBCA includes provisions regulating the minimum price to be
paid to shareholders in certain business combinations. Such provisions of the
CBCA may supersede the provisions of the Company's Certificate relating to
such business combinations. If the provisions of the CBCA apply, and subject
to the exemptions contained therein, a business combination must first be
approved by the Board of Directors and then be approved by the affirmative
vote of at least (1) the holders of 80% of the voting power of the outstanding
shares of the Voting Stock of the Company and (2) the holders of two-thirds of
the voting power of the outstanding shares of the Voting Stock of the Company
other than Voting Stock held by the interested shareholder who is, or whose
affiliate or associate is, a party to the business combination or held by an
affiliate or associate of the interested shareholder. The above vote required
by the CBCA does not apply, among other things, to a business combination (1)
in which the minimum price conditions of the CBCA and certain procedural
requirements have been satisfied, or (2) with an interested shareholder which
has been approved by a resolution of the Board of Directors prior to the time
that the interested shareholder became an interested shareholder. The CBCA
defines an interested shareholder as the beneficial owner of 10% or more of
the voting power of the outstanding shares of voting stock of the Company.
In addition, the CBCA states that no resident domestic corporation shall
engage in any business combination with an interested shareholder of such
resident domestic corporation for a period of five years following such
interested shareholder's stock acquisition date unless such business
combination or the purchase of stock made by such interested shareholder on
such interested shareholder's stock acquisition date is approved by the Board
of Directors of such resident domestic corporation and by a majority of the
nonemployee directors, of which there shall be at least two, prior to such
interested shareholder's stock acquisition date. For the purposes of that
provision of the CBCA, "interested shareholder" means any person, other than
such resident domestic corporation or any subsidiary of such resident domestic
corporation, that (A) is the beneficial owner, directly or indirectly, of 10%
or more of the voting power of the outstanding voting stock of such resident
domestic corporation, or (B) is an affiliate or associate of such resident
domestic corporation and at any time within the five-year period immediately
prior to the date in question was the beneficial owner, directly or
indirectly, of 10% or more of the voting power of the then outstanding voting
stock of such resident domestic corporation.
SPECIAL REDEMPTION OF BONDS RELATING TO CHANGE IN CONTROL
Bond purchase agreements with holders of first mortgage bonds issued by
Southern in the aggregate principal amount of $114,982,000 contain provisions
that require Southern, if requested by such bondholders, to redeem all of
such bonds in the event of a change in control of Southern. Such special
redemption shall be made not less than 15 days nor more than 45 days after
receiving a request from the bondholder for redemption of its bonds.
Such request must be made not later than 45 days after the change in control
has taken place. A change in control occurs when any person or group of
related persons (other than the Company) (i) has beneficial ownership of a
majority in interest of Southern's outstanding voting stock or (ii) acquires
all or substantially all of Southern's assets. Neither of such events shall be
deemed to be a change in control if Southern shall have merged or sold all or
substantially all of its assets in compliance with and as permitted by
Southern's current bond indenture and, after either of such events, no person
or group of related persons shall have beneficial ownership of a majority in
interest of the outstanding voting stock of the successor corporation.
If a special redemption occurs, the special redemption price shall equal the
sum of the respective Payment Values of each prospective Interest Payment and
Principal Payment, as such terms are defined in the bond purchase agreements.
The existence of the special redemption provisions may act as a deterrent to a
person desiring to take control of the Company as it could require the
refinancing of a substantial portion of Southern's long-term debt.
GENERAL
The Company's Common Stock is listed, and the Common Stock offered hereby
will be listed, on the NYSE under the symbol "CNE."
Boston EquiServe is the registrar and transfer agent for the Company's
Common Stock.
The Company's Certificate contains a provision pursuant to which the
personal liability of a director of the Company to the Company or its
shareholders for monetary damages for breach of duty as a director shall be
limited to the compensation received by the director for serving the Company
as a director during the year of the violation if such breach did not (a)
involve a knowing and culpable violation of law by the director, (b) enable
the director or an associate, as defined in subsection (3) of Section 33-374d
of the Connecticut Stock Corporation Act ("CSCA"), to receive an improper
personal gain, (c) show a lack of good faith and a conscious disregard for the
duty of the director to the Company under circumstances in which the director
was aware that his conduct or omission created an unjustifiable risk of
serious injury to the Company, (d) constitute a sustained or unexcused pattern
of inattention that amounted to an abdication of the director's duty to the
Company, or (e) create liability under Section 33-321 of the CSCA. The CSCA
remains applicable for some purposes even though it has been replaced by the
CBCA. The provision does not preclude or limit a director's liability for acts
or omissions occurring prior to the effective date of the provision.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONNECTICUT ENERGY CORPORATION
(Registrant)
Date: July 10, 1997 By: /s/Carol A. Forest
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Carol A. Forest
Vice President, Finance, Treasurer
and Chief Financial Officer
